Discussion Paper D-73E

ENERGY IN DEVELOPING COUNTRIES SERIES

The Role of Rural Electrification

in Development

Elizabeth Cecelski with Sandra Glatt

A Discussion Paper from the Center for Energy Policy Research

RESOURCES FOR THE FUTURE / WASHINGTON, D.C.

Discussion Paper D-73E

ENERGY IN DEVELOPING COUNTRIES SERIES

THE ROLE OF RURAL ELECTRIFICATION

IN DEVELOPMENT

Elizabeth Cecelski
with
Sandra Glatt

The Center for Energy Policy Research issues this paper in the Energy in Developing Countries Series. Presentation of this paper does not constitute formal publication, and references to this work should cite it as "unpublished" material.

RESOURCES FOR THE FUTURE / WASHINGTON, D.C.

April 1982

Acknowledgement
The research for this study was funded by the Ford Foundation under
Cooperative Agreement No. AID/DSAN-CA-0179 established between Resources
for the Future and the U.S. Agency for International Development, Office of
Energy (Directcr, Alan B. Jacobs), Pamela L. Baldwin is the A.I.D. Project
Officer for this Cooperative Agreement. The research staff at RFF is
headed by William Ramsey, Project Officer and Principal Investigator, and
Joy Dunkerley, Co-Principal Investigator. Manuscript preparation was
coordinated by Marilyn M. Voigt.
The views expressed in this paper are those of the authors and should
not be interpreted as representing the views of either A.I.D. or Resources
for the Future.

iii

List of Tables

Page Table 1. Table 2. Extent of Rural Electrification, by Region Lending for Rural Electrification by Come International Aid Organizations Percentage Achieved of Forecast Targets for Rural Electrification in Selected Areas of India Electricity Consumption by Sector in Some Rural Areas Changes in the Sectoral Distribution of Electricity Consumption Over Time in Some Rural Areas Potential Benefits from Rural Electrification Average Annual Electricity Consumption Per Residential Consumer, and Growth Rates, Selected Rural Areas Extent of Rural Electrification by Size of Population Centers, Andhra Pradesh, India, 1975 Distribution of Rural Incomes and Electricity Consumption, Connected Households, El Salvador Table 10. Table 11. Appliance Ownership in Some Rural Areas Changes in Agricultupal Output and Value with Electrification of Tubewells, Kurnool District, Andhra Pradesh, India Returns Per Acre, Using Electric, Diesel and Both Electric and Diesel as Motive Power for Tubewells, Rural Gujarat, India Additional Income Realized by Pumpset/ Tubewell Users After Electrification, by Size of Holding, Madhya Pradesh and Uttar Pradesh, India 24 27 2 3

Table 3.

Table 4.

10

Table 5.

11

Table 6. Table 7.

14 18

Table 8.

20

Table 9.

22

Table 12.

28

Table 13.

30

Iv

Table 14. Table 15.

Uses for Electricity in Small Industries, India Number of Industries Before and After ElectriIndian Schemes by Size of Village Case Studies of Comparative Benefits of CentrallyGenerated Electricity and Alternatives for Industry, El Salvador Crude Birth Rates, Misamis Oriental Province, 1971-75 Typical Comparative Costs of Autogeneration and Central Grid, El Salvador Household Expenditures on Electricity and Substitutes for Lighting, Selected Areas Comparative Costs of Diesel Engines and Electric Motors for Irrigation, India Selected Variable Charges for Electricity Financial Statement, Kodinor Rural Electric Cooperative, Gujarat, India 1970-73 Total Cost Comparisons Between Electricity and Its Substitutes, El Salvador Share of the Expenditure of Electricity on Total Operating Costs, Chilean Manufacturing Census 1967 Fuel an a Percent 3f Total Production Costs, Artisan Crafts and Small Industries, India Labor-Intensivity and Productivity in SmallScale Industries With Different Production Technologies, India

31 32

Table 16.

34

Table 17.

38

Table 18.

42

Table 19. Table 20.

46 48

Table 21. Table 22.

50 53

Table 23, Table 24.

55 58

Table 25.

60

Table 26.

61

Introductory Note

Rural

electrification

has

been

the

cornerstone

of

rural energy

programs in developing countries. Electricity has provided a safe and

efficient energy source for residential and public lighting, pumping

drinking others. water, irrigation, refrigeration, rural industries, and many

Clearly, rural electrification has been beneficial to developed

societies, and most early policy planners felt that the same or similar
benefits could be achieved in developing societies.
Recently questions have been raised regarding whether the benefits of
rural electrification for a developed society can be duplicated developing country context. from connecting to the electrification grid. in the

Low rural incomes may prevent rural families

The original assumptions of

development planners regarding rural electrification may not necessarily be

fulfilled. expenditures, Because the electrification projects involve high capital
actual impact of rural electrification in developing

countries needs to be evaluated.

"The Role of Rural Electrification

in Development,"

a discussion

paper, funded in part by the Rockefeller Foundation, is an analytic review

of recent research on rural electrification. Ms. Cecelski reviews
important issues involved in rural electrification, including regional and
social equity, productive impacts, indirect benefits, and in very general
terms the comparative costs of central grid, autogeneration, and

alternative eneirgy programs. this kind, in the final

However, as is the case with most reviews of

questions than

chapter the paper raises more

answers.

Resources for the Future has made a major commitment to addressing

many of the issues presented in this Discussion Paper. One of the major

goals of the ARDEN (A.I.D.-RFF Development and ENergy) program, funded by

the Agency for International Development under Cooperative Agreement No.
AID/DSAN-CA-0179, has been to examine the socioeconomic impacts from, and
costs and benefits of rural electrification in developing nations.

vi

Socioeconomic impacts are examined in two major projects, one being

carried out in India and the other in Colombia. Both studies evaluate

effects on rural productivity and social equity, and investigate conditions

complementary analyses will to be successful based on outcomes recent from field rural electrification. covering over The
1500

surveys

households in 180 communities.

Costs and some specific economic benefits of rural electrification are
examined in other studies in the same two countries, India and Colombia.
The purpose of the India study is to determine the corporative subsidy

required to extend the central grid to villages with different development

profiles. The Colombia study investigates the extent of subsidies involved
Discussion Papers reporting on the above papers

in rural electrification. will soon be available.

We issue this report on work in progress with the multiple purposes of

informing the policy community of the state of knowledge, of stimulating
research elsewhere, and of eliciting comments on our own efforts.

Milton Russell
Director
Center for Energy Policy Research

Introduction

Substantial resources have been devoted to rural electrification in

developing countries for both economic and social reasons--an estimated $10
billion by 1971 in the nonCommunist regions, with an even larger amount
expected to be invested in the next ten years (World Bank, 1975b, p. 3).
The provision of electricity in rural areas is widely believed to be a
stimulus raising to the increased living rural agricultural of productivity people. and In output through

irrigation and mechanization, to the growth of rural industries, and to

standards rural is most developing
enough to

countries,

electrification

considered

important

subsidize extensively. not great overall.

The extent of rural electrification is nonetheless

As table 1 illustrates, about 23 percent of the
15 percent in Asia, and 4
(World

village--rural population in Latin America,

percent in Africa south of the Sahara are served by electricity Bank, 1975b).

The role of international aid organizations is a key one in this area,

both because a significant part of the funds being spent on rural

electrification are in the form of loans at concesslonal rates from these

groups, and because much of the technical and planning advice on

electrification and other energy alternatives in development of rural areas

emerges from these lenders as well. participation in rvral electrificatio to areas of Table 2 indicates the magnitude of
of the largest concessional lenders.
dispersed areas

Rural electrification can be defined as the provision of electricity

Low can demand be and highly to potential through consumers.
small-scale

Electricity

supplied

such

autogeneration, local independent grids, or a central regional or national

grid. grid In this paper, "rural electrification" usually refers to the central
because most data on impact are based on changes after the
In most cases, however, the benefits

introduction of the central grid.

1. "Served" means that the village was connected to a grid, not that
its total population was using electricity, so these figures are probably
greatly over-estimated. Data from India, for example, indicate that
perhaps 10 percent of houses in electrified villages actually have
connections.

2
Table 1. Extent of Rural Electrification, by Region

Population in (millions Region Total Village b

1971a

Village-rural populationbc
served in 1971
Millions Percentage

Rural b

Latin America Selected countries in

Europe, Middle East,
and North Africa Asia Africa

282

140

(50)

32

23

143 934 182 1,541

87 700 165 1,092

(61) (75) (91) 71

45 105 7 189

15
15
4
12

Note: Electrification data have been compiled from miscellaneous documents

and correspondence with countries, and are not official statistics. Population
data are from United Nations documents.
Source: World Bank, Rural Electrification: D.C., World Bank, 1975) p. 17.
A World Bank Paper (Washington,

aPopulation figures refer to the whole region, except in the case of Eur.ope,
Middle East, and North Africa (see footnote d).
bThe definitions of "village" and "rural" vary between countries.
Generally,
villages are conglomerations of 5,000 to 10,000 inhabitants or less; rural refers
to low-density populations outside the villages, often living in clusters close
to large farms.
cElectrification data are not available for each country and the percentages
should be taken as typical levels for countries in the region, about which there
may be considerable variance.
dAlgeria, Cyprus, Egypt (Arab Republic of), Iran, Morocco, Saudi Arabia,
Tunisia, and rurkey.

Table 2. Lending for Rural Electrification by Some International Aid

Organizations (U.S. $ millions)
World Bank, 1976-1978
India Egypt Syria Philippines Thailand 57
48
40
60
25

Total Rural 230

Total Electri fication 3,047
Inter-American Development Bank,
19 6 1- 19 7 8 a

IDB loan Argei~tina Bolivia Brazil Chile Colombia 219 174 1,052 90 415

Total cost
of projects
895
206
8,079
282
1,233

Ecuador
El Salvador Regional Other Total

170
109 394 665 3,288

582

386
6,555
1,560
19,77

b
U.S. Agency for International Development, 1961-78

Africa Asia Latin America Near East Central Funds Total

0
278
93
59
405
835

Source: Personal Communication, The World Bank Electricity, Water, &

Telecommunications Division, and World Bank, A Program to Accelerate
Petroleum Production in the Developing Countries (Washingon, D.C., World
Bank, 1979); IDB Annual Report, 1978, and Personal Communication, Energy
Section, Infrastructure Division, IDB; and ID, 1978.
aIncludes total electrification lending.
bExcludes two projects in Asia, two in Latin America, and one
centrally funded, for which financial data was unavailable.

from using electricity would be similar with autogeneration, in that new

electricity-specific services are
provided by both autogeneration and the
grid.
Costs, however, would be different, so a discAnction is made between
autogeneration and central grid in the section on costs and at other points
where it is relevant to do so.
The introduction of electricity through the grid to rural areas
is
also usually preceded by its
use in urban areas and large towns. In one
sense, then, "rural" electrification cannot really be separated from
electrification in general, because investments in generation and
distribution are also investments in future rural electrification.
Historically, the use of electricity has been almost linearly
associated with rising incomes and productivity (Guyol, 1969). Today,
developing countries with higher per capita incomes typically consume more
electricity per capita (Strout, 1977, p. 14) and also devote more
investment resources Nevertheless, the to rural electrification than do poorer countries.
of causation in the direction

relationship
between
electricity and rural economic development has not been well established. Given that expenditures on rural electrification represent scarce
investment resources that could be fruitfully spent in a number of
different ways to meet energy the lack of
studies examining the causal relationship between rural electrification and
socio-economic development is surprising, though less so when one considers
the difficulty of the task.
The intent of this paper is to examine in a preliminary way this
relationship between rural electrification and economic growth. Given the
lack of systematic studies on this topic, any conclusions drawn from
previous primary studies focus is are necessarily tentative and limited: instead, the
attention.
on identifying promising or other development needs,

areas for future

First, different frameworks of analysis frequently used in evaluating rural

electrification projections
are reviewed for their usefulness in assessing
Then, the
assumed developmental benefits of rural electrification are compared with
evidence from actual projects. Costs of electricity and its most common
substitutes--autogeneration in industry,
kerosine in household lighting,
and diesel engines in irrigation--are examined. Pricing policies and
subsidies are discussed; and the effects of availability, reliability, and
impacts of electrification on rural econoiic development.

price

of

electricity

on

use,

benefits,

and

production

decisions

are

analyzed.

Finally, a preliminary assessment about how rural electrifi

cation programs and research should proceed in the future is suggested on

the basis of these findings.
The State-of-the-Art

Frameworks for Analysis:

Some of the frameworks most commonly used in evaluating the success of

rural electrification projects are limited in their usefulness in assessing
the impact of rural electrification on economic development. Since these
forms of appraisal have largely determined the type of data information
which is available about past rural electrification programs, four merit
consideration here: (1) meeting "targets" or "forecasts"; (2) financial
viability; (3) impact analysis; and (4) benefit-cost analysis.
First, lenders have commonly asked simply: was the project completed?
Were the required number of miles of power lines constructed within the
allotted time period, the funds spent in the prescribed way, etc.? national rural electrification projects, a variation In
of this theme is
number

whether targets in the rural electrification scheme have been met: of villages electrified, pumpset connections sold.

"released," kilowatt hours

The

use

of

targets

is

good

means

of

checking

success

in

construction, forecasting, and promotion of use, especially if targets are

set carefully. some reasonable Presumably the yearly targets are the load forecast upon
assumptions about the unsatisfied effective demand for
But in many

electricity that exists or will exist in the countryside.

cases targets instead appear to represent the minimum load levels required
to make a project financially viable. Table 3 shows the extent to which

targets for village electrification have been achieved in some areas of

India: in most cases connections and number of villages electrified have
fallen short of expectations.

2. See, for example, CMA, 1974; Sen Lalit, 1974; and Sen Gupta, 1977.

Table 3.
Percentage Achieved of Forecast Targets for Rural Electrification in Selected Areas of India
(% of forecast targets)
Madhya Pradesh Pench Villages electrified Pumpset connections Rural industries Domestic/Commercial Street lights 86 63 387 81 174 Depalpur 203 14 92 19 163 Uttar Pradesh Modinagar 91 127 28 9 15 Chandauli 29 44 15 0.4 0.2 Andhra Pradesh Kurnool 54 30 16 -

Telangana 97 37 22 15 54

Una 85 18 37 38 2

Gujarat BayadModasa Kodinar 65 13 56 42 38 42 20 58 68 -

Sources:
National Council of Applied Economic Research (NCAER), Cost Benefit Study of Electrification Schemes in Madhya Pradesh Selected Rural
and Tittar Pradesh (New Delhi, NCAER, 1977) pp. 4-5 and Perspective
Plan for Rural Electrification in the Telangana Region of Andhra Pradesh (1975-76 to 198889) (New-Delh--
NCAER, May 1978) pp. 444-445; Shreekaut, Sambrani, Gunvant M. Desai, V. K. Gupta and P. M. Shingi, Elecri
fication in Rural Gujarat:
Vol. I Kodinar Rural Electricity Cooperative Ltd.,
Vol. II Una Scheme; Vol. III
Bayad-Modasa (Ahmedabad, Center for Management in Agriculture, October 1974); Small Industry ExtensionTraining
Institute (SIETI), Impact of Electrification on Rural Industrial Development:
A Study in Kurnool District,
Andhra Pradesh (Yousufguda, Hyderabad, SIETI, 1976) p. 108.

A second and somewhat more useful approach rating the financial viability. 3 the calculations, thi.s

for these purposes is

in terms of its

success of a rural electrification projet

Since social benefits and costs are excluded from

approach is still on insufficient: the part but financial
does

viability

indicating

willingness-to-pay

of consumers

provide a direct if imperfect measure of jome benefits from the project and
a presumption of a positive economic rate of return. A project lacking

financial viability may still have a positive economic rate of return,

however, since uncounted social benefits will almost always outweigh the
uncounted social costs.
The use of financial viability or completion of agreed construction as
criteria for success is an understandable approach on the part of lenders,
who will oe concerned that they be re aid in a timely fashion, and that the
power sector be insulated from political pressures in other parts of the
government. Few developing country utilities appear isolated from

political considerations, however; indeed, if rural electrification is to

be an effective for part of a development program, the goals of politics are probably
Some
important determining electrification policy.

authors have argued that internat ..al lenders should accept this political
aspect of rural electrification programs and determine how best to achieve
efficiency goals in the power sector within this framework (Tendler, 1978;
McCawley, 1979).
A third way of evaluating rural electrification projects is to
ascertain its impact on users: what changed after electrification? This

approach can assume various levels of sophistication, from just listing

potential benefits that might result from el'-ctrification, to quantifying
concrete changes in output pre- and post-electrification, and finally to
attempting tu establish an actual causal linkage between electrification
and certain results. 4 The evaluation of impacts of infrastructure projects

such as electrification, roads, and telecommunications is different from

that of most other projects in that the outputs of infrastructure

3. See, for. example, NRECA, 1974.

4. See, for example, respectively, NRECA, 1978; Davis, 1973; and
NCAER, 1977.

projects are often difficult to define and measure. This is particularly

true in attempting to analyze the impact of rural electrification on
economic development, since the primary interest output--electricity--out the more indirect here is not the direct
in production and
changes

lifestyles whicn result from its use.

Another situation in difficulties problem is order to normally the need to know both the "before" measure associated impacts with accurately. consumer surveys in and "after" all the
developing

Besides

countries and among the poor, surveys made prior to electrification can
only ask for approximations of intended use, while those carried out
afterwards must rely upon the memory of users as to energy consumption and
prices. Furthermore, while some direct effects, such as cost savings over
alternative fuels, are relatively easy to attribute to electrification,
others, such as changes in productivity, are not; and indirect benefits
such as environmental improvement are even more difficult to assign. Then
too, many effects will only become evident years after the project has been
completed. Thus, impact analysis, while satisfactory in many respects--if
these measurement problems can be solved--still only takes into considera tion the benefits while ignoring the costs of rural electrification.
A fourth approach to evaluating these effects is benefit-cost
analysis. Since investment resources in developing countries are scarce

and have many competing uses, ideally all social costs and benefits should
be valued in money terms, and net benefits of rural electrification
projects calculated and compared with the net benefits of other uses for
capital. Benefit-cost analysis seems the most appropriate framework of the
four described above to use for getting at the role of rural
electrification in development. It is thus perhaps surprising, at first

glance, that this approach has been so rarely used in the evaluation of
rural electrification programs. One obvious reason for this neglect is the
difficulty of determining and measuring impacts and linkages, as discussed
above.
This review will adopt benefit-cost framework as a point of view for
examining rural electrification. This framework will be an exceedingly
broad one, including both direct and indirect effects--at least in theory.

Usually, of course, the data from past rural electrification projects will
only support a qualitative or anecdotal valuation of impacts, and the
structure of the costs is also usually not transparent.
Benefits from Electrification

Sectoral Consumption
Before examining benefits from rural electrification in detail, it is
useful to get an overall impression of how electricity consumption is
distributed among sectors of the economy and the quantities that
are
consumed.
First, it should be realized that the quantities of electricity
areas tend to be very small, both in the aggregate and
consumed in rural
per consumer, as compared to urban areas--less than one fourth of urban
levels, according to World
Bank figures (World Bank, 1975b, pp. 25-26).
For example, 90 percent of connected rural households in a surveyed area of
the Philippines where rural electrification is considered highly successful
used less than 35 kilowatt-hours of electricity a month--about enough to
use two 100-watt light bulbs for four hours a day (USAID, 1976, p. 150).
Second, electricity the weight of different sectors in total 4 rural shows area
the
Table

consumption

varies

enormously.

residential-commercial share being quite high--about 25 to

60 percent in
the surveyed areas of most countries--with the notable exceptions of India
and parts of Nicaragua, where agricultural or industrial uses predominate
and consume most of the total in some rural areas. It is not clear the
extent to which this distribution reflects the desire for electricity in
In some cases,
these areas, however, or different types of agriculture. this sectoral distribution appears to have been a result of policy: in the
Philippines, a promotional campaign has emphasized households, and in
India, irrigation has been put at the forefront of electrification.
Interestingly, the distribution of these uses appears to change little
over time in most cases (see table 5) although the establishment of
industry uith a large load (many industries have higher consumption levels
than an entire village of residential consumers) can make a big difference
in a short period. In the Philippines, for example, the share of the large
commercial and industrial sector rose from 3 percent to 23 percent of total
But in the other areas
consumption in only three years (see table 5).

Table 4.

Electricity Consumption by Sector

in Some Rural Areas (% of kWh consumed)

Residential (1) Costa Rica (1973)

El Salvador (1972) Nicaragua (1976) COERAN CODERSE
CAEER Telangana, A.P. (1975s76) Suryapet, A.P. (1971) Una, Gujarat (1973) Bayad-Modasa, Gujarat (1973) Indonesia (1974-75) Philippines (1975-76)
Caaarlnes Sur I Albay Coop. Misamis Oriental Thailand, PEA (1972) 30
36
30 26 21
6
13 18 69 59 6f 30

Commercial
(2) 22 24
-AM 6d
6 12
1 13 18 -29 21 16 31

Industrial (3)
45
34
2 e 55 18e 17
7 23 3
3 --

23h

Irrigation (4) -2
6o
4 2 8 88 79 54 -1 2

--

All
Productive
Uses
(2)+(3).(4) 67 60
62 63
26 77 93
86
__
3
30
25 67 Othera
3 4 8 11
20 2
1 1 5 28 11 11 11 3 Total
100
100
100
100
100
100
100
100
100
100
100
100
100
100

Sources:
Ross, James E., Cooperative Rural Praeger, 1972); Davis, J. Michael, John Saunders, Electrification:
Case Studies of Pilot Proects
in Latin America (New York,
Galen C. Moses, James E. Ross, Rural Electrification: on Economic and Social Changes in Costa Rica An Evaluation of
Effects
and Colombia, report to U.S. Agency for International cal Agriculture, Center for Latin American Development (Center for Tropi-
Studies, University of
Florida, Gainesville, Benefits of Rural Electrification: Florida,
1973); World Bank, A Case Study in El Salvador,
P. U. Res. and
Peter, "Rural Electrificati,n in Indonesia--Is 5 (Washington, D.C., World Bank, 1975); Costs McCawley,
it Time?* Bulletin of Indonesian Economic Studies
(1979); Developing Alternatives,
Inc., An Evaluation of the Pro ram Performance of the International Program Dlvislon of theational Rural Electric Association (RRECJ), report to U.S. AID Cooperatve
(Washington,
D.C., 'Al, January 28, 1977); U.S.
Agency for International Development
(USAID), An Evaluation Study of the Misamis Oriental Electric Service Cooperative
(Manila, Anderson, Electricity Economics: Essays USAID, 1976); Turvey, Ralph and Dennis
mud Case Studies (Baltimore, Johns Hopkins University Press for
the World Bank, 1977);
National Council of Applied Economic Research, Cost Benefit Study of Selected Rural Electrifiation Uttar Pradesh (New Delhi, NCAER, 1977); Sent Schemes
in Madhy Pradesh and
Lalit K. and GiriLh K. Misra,
Regional Planning for
Rural Electrification.
Study in Suryapet Taluk N A Case
olonda Dstrict Andhra Pradesh (Hyderabad, National Institute of
Sambrani, Shreekaut, Gunvant M. Desal, V. Community Development, 1974)"
K. Gupta and P. M. Shingi, Elentrification Electricity Cooperative Ltd in Rural Guiarat
Vol. I. Kodinar Rural
Vol. II Una Scheme; Vol. III Bayd-Modasa (Ahmedabad, Center for
Management in Agriculture, 1974); and Moon, Gilbert and Kational Rural October
Elactric Cooperative Association
(NRECA), Report on
Rural Eletrfication Costs
Benefits, Usages. Issues and Developments in Five Countries
(Washington, D.C.,
NRECA, 1974).
a Includs street lights, government offices, public buildings, water pumps
and systems, and
own use by plant.
bPercent connected load.
LV 14 and HV motive power 20.
dSmall business and industry.

eLarge business and

industry.
rProblaoions 31.5, barrios 32.5.
gProblacions 21, rural 23.
hsmall 18.0, medium 3.3.
iSmall business 16, general business 12,
medium business 6.
Large business and mining.

11
Table 5. Changes in the Sectoral Distribution of Electricity Consumption Over
Time in Some Rural Areas (% of total kWh)

Year la 2 3 4 5 6

El Salvador Domestic General Motive Power Ir-igation Public Lighting 40 27 23 2 8 100 36 24 34 2 4

Thailand Households Business Small General Medium Large Mining Irrigation Waterworks 35 13 17 2 10 20 2 100 30 16 12 6 30 3 2 100

Philippines (Misamis) Residential poblacions rural Public buildings Commercial small large & Industrial Irrigation Water System Public Lighting 26 27 7 26 3 1 10 100 22 24 4 22 13 2 3 10 100 23 24 4 21 15 2 3 8 100 21 23 4 16 23 2 5 6 100

Telangana, A.P., India Residential Commercial Industrial Irrigation Other Una, Gujarat, India Residentialb Industrial Irrigation 16 7 77 100 14 13 73 100 13 7 79 100 20 15 16 44 4 100 20 14 16 47 3 100 19 13 16 49 3 100 19 12 16 51 2 100 21 12 17 48 2 100

12
Table 5 continued

Bayad-Modasa, Gujaratp India Residentialb Industrial Irrigation Other 12 81 4 3 100 21 54 21 4 100 24 25 46 5 100 18 23 54 5 100

Sources: Ross, James E., Cooperative Rural Electrification: Case Studies of

Pilot Projects in Latin America (New York, Praeger, 1972); Davis, J. Michael, John
Saunders, Galen C. Moses, James E. Ross, Rural Electrification, An Evaluation of
Effects on Economic and Social Changes in Costa Rica and Colombia, report to U.S.
Agency for International Development (Center for Tropical Agriculture, Center for
Latin American Studies, University of Florida, Gainesville, Florida, 1973); World
Bank, Costs and Benefits of Rural Electrification: A Case Study in El Salvador,
P.U. Res. 5 (Washington, D.C., World Bank, 1975); McCawley, Peter, "Rural Electrifi cation in Indonesia--Is it Time?" Bulletin of Indonesian Economic Studies (1979);
DevelopinS Alternatives, Inc., An Evaluation of the Program Performance of the Inter national Program Division of the National Rural Electric Cooperative Association
(NRECA), report to U.S. Agency for International Development (Washington, D.C., DAI,
January 28, 1977); U.S. Agency for International Development "USAID), An Evaluative
Study of the Misamis Oriental Electric Service Cooperative (Manila, USAID, 1976);
Turvey, Ralph and Dennis Anderson, Electricity Economics: Essays and Case Studies
(Baltimore, Johns Hopkins University Press for the World Bank, 1977); National Council
of Applied Economic Research, Perspective Plan for Rural Electrification in the
Telangana Region of Andhra Pradesh (1975-76 to 1988-89) (New Delhi, NCAER, May 1978);
Sen Lalit K. and Girish K. Misra, Regional Planning for Rural Electrification. A
Case Study in Suryapet Taluk, Nalgonda District, Andhra Pradesh (Hyderabad, National
Institute of Community Development, 1974); Sambrani, Shreekaut Gunvant M. Desai, V.
K. Gupta and P. M. Shingi, Electrification in Rural Gujarat: Vol. I, Kodinar Rural
Electricity Cooperative Ltd; Vol. II Una Scheme; Vol. III Bayad-Modasa (Amhedabad,
Center for Management in Agriculture, October 1974); and Moon, Gilbert and National
Rural Electric Cooperative Association (NRECA), Report on Rural Electrification Costs,
Benefits, Usages, Issues and Developments in Five Countries (Washington, D.C.,
NRECA, 1974).
aln most but not all cases, year one is the first year after electrification.
bIncludes commercial.

13

surveyed here, sectoral shares of consumption of electricity have generally

remained relatively stable.

Benefits
of net benefits in
While ultimately desirable to arrive at a measure
terms of economic development due to electrification, it is simpler first
to view gross benefits assumed to result from rural electrification, and
compare these assumed benefits with evidence from projects, without
explicitly considering costs. Developmental benefits often cited as

potentially or possibly due to rural electrification are numerous, as can

be seen from table empirically, 6. This myriad of benefits have rarely been tested
and quantitative evidence of their importance or

however,

indeed their existence is difficult to find.

One review has gone so far as

to conclude that "the more objective the study and the more thorough the
data collection and analysis techniques, the fewer benefits can be
attributed to rural electrification." (DAI, 1977, p. 84). A difficulty
here is that some of the most important assumed benefits are the hardest to
measure, as discussed above.
Another related problem is that detailed

over long periods of time would be needed to capture all benefits,

studies
and effects become more difficult to assign to causes as time passes.
and

Here, both direct benefits to households, agriculture, and industry; indirect benefits
in terms of social and public uses,

employment,

environmental improvements, foreign exchange savings, demographic changes,

political stability, and modernization, will be considered, in at least a
qualitative and whenever possible, a quantitative way.

Direct Benefits
In theory, direct benefits to users of electric power are of three
First, electricity may cost less than alternatives providing the
sorts. same energy services; electric pumps may be cheaper than diesel. Second,

electricity may allow the performance of entirely new tasks, or may perform
the same tasks so much more efficiently than other energy sources that they
are actually qualitatively available new with tasks. Where television new or and improved
quality

lighting

become

electrification,

higher

services are achieved.

In addition, the availability of cheaper energy or

this ability to perform essentially new tasks can result in more energy

14

Table 6. Potential Benefits From Rural Electrification

Few would disagree that one of the most significant differences between
the developing nations of the world and those in which people e'joy
healthy, productive lives is the establishment and widespread use of
effective electric power systems. Since 1961 NRECA's International
Programs Division hap provided management consulting services and technical
assistance to the Agency for International Development of the U.S.
Department of State and to other international agencies and institutions
involved with the planning and development of feasible rural electric
distribution systems in countries throughout the world. IPD assistance has
been utilized in 33 countries to establish or improve rural electrification
programs, and over four million people are now benefiting from this
assistance. The following list of 50 indicators of social and economic
benefits demonstrates that rural electrification, as part of a rural
development program, can introduce immediate and tangible benefits to the
rural population, especially the rural poor.
1. Irrigation systems utilizing electric system equipment, tube wells,
etc., allowing for multiple cropping.
2. Property formulated livestock and poultry feeds prepared in small
mills.
3. Automated poultry processing/breeding systems.
4. Refrigeration of perishable farm agricultural products and utilization
of milk coolers.
5. Electrically powered grain drying, processing, storage systems and
fumigation.
6. Conservation of export quality timber (electricity replaces wood for
cooking and heating).
7. Fish farms in areas where pumps required.
8. Working through his Cooperative provides farmer with some degree of
leverage in the marketplace.
9. Agriculture employment opportunities generated.
10. Electrically powered handicraft industries allowing for varied and
increased production. (Cottage or home produced items can be made
during off peak seasons of agricultural cycles).
11. Employment opportunities, especially for women, in commercial
nonagricultural industries. (Due to electricity, women with reduced
homemaking chores are able to earn much needed extra income either on
full-time or part-time basis).

15

12. Market/stores utilizing refrigeration. Decrease in spoilage of

perishables, especially in tropical areas.
13. Development of small industries to meet created demand for simple
electric appliances.
14. Development of industries supplying poles, cross arms, insulators,
hardware, meters and transformers for electric distribution systems.
15. Employment opportunities created by Cooperatives, contractors, National
Electrification Administration, auditing and accounting firms.
16. Limited school facilities utilized for night classes.
17. Community facilities such as libraries opened in evenings.
18. Wider use of audio visual equipment and materials in schools and adult
education programs.
19. Allows for home economics training for women utilizing sewing machines
and home appliances.
20. Women's routine home chores eased, which allows for daughters to be
freer to attend school.
21. Lighted outdoor athletic facilities such as basketball courts allows
for community recreation. (Too hot in tropical countries to
participate during daytime.)
22. Teachers more productive and better prepared dua to home lighting.
23. Students academically improve. Homework better prepared.

24. Refrigeration of medical supplies by clinics and hospitals.

25. Use of sterilizers and electrical detection equipment in rural clinics.
26. Reliable source of power for hospitals and operating rooms.
27. Home electrical appliances allow for sanitary preparation of food and
water. Electric pumps provide potable water.
28. Home refrigeration prevents spoilage of perishale foods adn reduces
health hazards.
29. Restaurants utilizing electrical appliances and refrigeration reduce
health hazards.
30. Correlation of home lighting and decrease in population growth rate.
31. Increased security due to night lighting. 32. Lighted homes provide social benefiti.
Crime rate decreases.

16

33. Utilization of radio and television for education, entertainment and

leisure.
34. Appliances4
such as irons, hot plates, simple washing machines reduce
work burden for women.
35. New home construction and improvement results from electrification.
36. Cooperatives provide outlet for community and national participation by
rural population. Provides experience in management and democratic
decision-making.
37. Improved and increased craft production in addition to economic
benefits, enhances the cultural and aesthetic values that craftsmen and
crafts tradition mean to a nation (national pride).
38. Cooperative institution, organization and facilities utilized for
members' services
(Better Family Living) such as family planning,
crafts, home economics.

39. Change in social well being.

situation improves.

Index of satisfaction with one's current

New confidence.

40. Keeps the economic proceeds of a region invested locally.

41. Accelerates the monetization of the rural society.
42. Stems rural migration to rities and improves rural-urban balance.
Increased rural economic activity absorbs expanding rural labor force.
43. Decentralizes economic activity.
44. Rural population participating in a "self-problem solving" climate
rather than a "depending on the government" climate.
45. Increased net tax revenues to government.
46. Leveling of ethnic differences.
47. Improved citizens-government relationship.
48. Reduced socioeconomic imbalance in the population.
49. Expanded communications system to entire population. to communicate with its citizens. Government able

50. Reduced foreign exchange expenditures for kerosine and oil used for
lighting, cooking and heating. (A central generator is a much more
efficient method for supplying energy, rather than each household
purchasing fuel.)
Source: National Rural Electric Cooperative (NRECA) "Social and
Economic Benefits of Rural Electrification Cooperatives" (Washington, D.C.,
1978).

17

being used and in new production being undertaken, adding value in other
areas--more irrigation resulting in more agricultural output, for example,
or neuz processes being used in rural industry (Selowsky, 1975).
It is important to keep in mind, however, that tho demand for
electricity is a derived demand; the demand for electricity for pumps is a
result of the demand for irrigation; the demand for electricity for motive
power in small industries derives from demand for their products; the
demand for lighting could result from demands for education, necessitating
reading at night, etc. Thus, the benefits obtainable from electrification
will depend equally upon complementary investment devisions and inputs,
availability of credit for necessary electricity using devices, the
existence of transport, schools and other infrastructure, government
information services, and so on.
Benefits from electrification may be reaped by (1) households, (2)
With respect to social and public uses of
farms, and (3) industry. electricity, some of the benefits may be direct and others indirect; for
convenience, these have been treated in the following section on indirect
benefits.
Households. Direct benefits to households are presumably present if
consumers choose to use electricity--since a household would not allocate
funds to purchase electricity unless it provided a lower cost or higher
quality services. benefits to Thus the extent of use is an important measure of direct
The data support four generalizations: (1)

households.

average consumption per household is very low, but rates of growth can be
hign; (2) more advanced and larger areas tend to be more electrified than
smaller and more that backward are ones; (3) the have rather small higher percentages incomes of
than

households

connected

relatively

unelectrified households; and (4) appliance ownership is the single most

important determinant of electricity consumption and its growth.
Average consumption per household. While average consumption per
household are very low, rates of growth can be high. table 7, which shows average annual consumption This is clear from
of electricity by

residential consumers is low but varies greatly, from a very low number of
kilowatt-hours a month in the Philippines, to greater than early U.S. rural
levels in Costa Rica. Growth in consumption also appears to proceed quite
rapidly in many cases, with annual growth rates of over 50 percent at
times.

Table 7.

Average Annual Electricity Consumption Per Residential Consumer, and Growth Rates, Selected Rural Areas

1 kWh Costa Rica (1970-1973) Nicaragia (1968-73) El Salvador (1 9 6 3 - 6 7 )a Philippines (1972-75) poblacion rural United States (1 9 4 1 )b 607 414 419 kWh 630 370 463

2 Change 4% -11% 11% kWh 697 400 1086

3 Change 11% 8% 134% kWh 717 411 602

4 Change 3% 3% -45% kWh

--

5
Change
--

429 940

4% 56%

29 23 600

28 20

-4% -13%

36 22

29% 10%

40 24

11% 9%

--

Sources: U. S. Department of Agriculture Rural Electrification 1972 Rural Lines: The Story of Cooperative
Rural Electrification (Washington, D.C. GPO, 1972); Moon, Gilbert and National Rural Electric Cooperative
Association (NRECA), Report on Rural Electrification Costs, Benefits, Usages, Issues and Developments in Five
Countries (Washington, D.C., NRECA, 1974, p. 12 and p. 46); World Bank, Costs and Benefits of Rural Electrification:
A Case Study in El Salvador, P. U. Res. 5 (Washington, D.C., World Bank, 1975); and U.S. Agency for International
Development (USAID), An Evaluative Study of the Misamis Oriental Electric Service Cooperative (Manila, USAID,
1976, p. 158 of 198 Annex L).
aAll users.
bIncludes farms.

19

Distribution

of

Benefits: Size of Population Centers.

More advanced

and larger areas tend to be more electrified than smaller and more backward
ones; size table in 8 shows the percent of electrified localities by population
one of the most advanced Indian states in rural
larger population centers are more electrified
have shown larger and more advanced

Andhra

Pradesh, clearly,

electrification; than areas, smaller

ones.

Other

studies

not surprisingly, to be more electrified as well (see, for example,

The average

NCAER, 1978, p. 84; Sen Lalit, 1974, p. 107; Selowsky, 1976). 5 number of connections in some "electrified" Indian

villages has been

reported as low as 10 or 12 (SIETI, 1976, p. 167; Sen Lalit, 1974, p. 112).

Punjab is claimed only 30 as a completely of its electrified population state for example, but
actually has access to
reportedly electricity 3.5 percent percent

(Ramsay, of the

1979, p. 20). houses in

In rural Suryapet, an average of only

electrified villages use electricity; in

Karnataka the figure is 8 - 10 percent (Sen Lalit, 1974, p. 109; Sen Gupta,
1977, p. 29).
These spread figures for India, where electrification investment has been
widely rather

than deeply, are probably lower than for some other

countries. of all

In a surveyed rural area of the Philippines, 28 to 34 percent

households were electrified (though 54 to 74 percent had access to

other 1978, half words, could have received a connection had they so
p. 19). In Nicaragua, an informal survey revealed

electricity--in desired) that (NEA, than

fewer

of rural households with access to electricity had

connected (DAI, 1977, p. B-16).

There is of course, nothing wrong in itself with only larger villages
Nor

being electrified--in fact, economically this undoubtedly makes sense. receiving electricity,

is there necessarily anything wrong with only some households who desire it
particularly if this contributes to building up an

5. It is worth noting here that "electrified" in Indian parlance means

that a distribution transformer has been provided to supply power for low
tension lines, not that connections have actually been made. (ORG, 1977, p.

57).

20

Table 8. Extent of Rural Eleotrifioation by Size of Population Centers,

Andhra Pradesh, India, 1975

Size of Population Center (1971 Census)

Total Number of Villages

Percent of total
Electrified

0-499 500-999
1000-1999 2000-4999

9733 5438
6421 4832

7.9
31.6

55.1
76.2

5000-9999
More than
10000

725
89

89.1

100.0

Source: SIETI, Impact of Electrification on Rural Industrial

Development: A Study in Kurnool District, Andhra Pradesh (Yousufguda,
Hyderabad, SIETI, 1976, p. 107).

21

off-peak becomes are

load less

in

project designed primarily for productive uses. 6

It
however (a) if productive uses for electricity

justifiable,

ignored,

and (b) if household use is subsidized, as is common in most

ostensibly to make electricity accessible to the

developing

countries,

poor, but in practice aiding higher income households.

Use available groups by the P ir. Evidence is strong that electricity is not widely

to the poor, or at least, is much less available to lower income

to higher income ones. In Nicaragua, an informal survey of

than

households $57 be (DAI, better

showed the mecian income of users at about $100, of nonusers at

1977, p. B-27); in Costa Rica and Colombia, users were found to
educated electrified and have higher had incomes an than nonusers; and in El
family income of 4869

Salvador,

households

average

colones

($2,958), versus 1102 colones ($441) for nonelectrified households

Table 9 shows generally a very strong

(World Bank, 1975, P. 73). correlation between family income and levels of electricity use, with use
increasing from 90 kWh annually for the lowest income groups to over 1000
kWh for the highest.
it is strongly felt and observed by many rural electrification
practitioners that the rural poor do value electricity and are willing to
spend as much as 20 percent of their income on it. The El Salvador study
Still, showed income that families began to consume electricity at very low levels of
(World Bank, 1975a, p. 74). The Misamis Oriental Survey in the
7
Philippines gave similar results (USAID, 1976, pp. 26-27). may Use by the poor in Latin America, where income levels are fairly high,
also be different in Asia. Another exception in usage by the poor
probably be has made been areas such as the Philippines, where rural
heavily promoted by the government and by the
for

should

electrification

6. In India, for example, the recent emphasis has been on paying for a
project economically through irrigation uses. with household use merely
adjunct.
7. The sampling techniques in this survey have come under attack,
however; it has also been pointed out that electricity rates in this area
are the second lowest in the Philippines due to cheap hydroelectric power
(DAI, 1977, pp. A-33-34).

22

Table 9. Distribution of Rural Incomes and Electricity Consumption,

Connected Households, El Salvador (Salvadorian colones)
Average Family Income Range Less than 600 600-1200 1201-1800 1801-2400 2401-3000 kWh Per family Per Year 90 100 166 403 254

3001-3600 3601-4200
4201-4800 4801-5400 5401-6000 6001-9000 More than 9000

499 627
590 1225 444 1375 1105

Source: World Bank, Costs

and Benefits of Rural Electrification: A
Case Study in El Salvador, P. U. Res. 5 (Washington, D. C., World Bank,
1975).

23

president provided.

personally,

and

where

liberal credit for connections has been

Appliance electric single growth, The

Ownership. what

Even in cases where lower income groups do have

is it used for? of Appliance ownership is the
consumption and its

connections, most and important family and most

determinant

electricity

income

correlates strongly with appliance ownership.

first

important household use of electricity at all income

levels p. 14).

is for lighting (NCAER, 1977, p. 39; NEA, 1978, p. 23; Davis, 1973,
Ironing and fans in some climates appear to be the most popular
with radios and TV washing following. At higher income levels,
blenders,

uses,

refrigerators,

and sewing machines, record players and

even electric stoves are purchased.

Table households the results 10 in gives rural for high some areas. point data on appliance ownership by connected
First,

Several points are of interest here. to

India

low appliance ownership generally, but

Second, in

surprisingly the

appliance ownership in some backward areas.

Philippines

(and probably elsewhera if there were data available), it

own them. areas of (This

is clear that more people use appliances--in particular television sets and
refrigerators--than effect is somewhat stronger incouperative-electrified areas.) States Finally, shortly as in it after is of the Philippines than in noncooperative that appliance usage in the United

interest

rural electrification was also of the same order of

magnitude

developing countries today, with lighting probably being

be

the most important single use of electricity.

It should noted labor, here may that not be one possible advantage of appliaace
of great importance in developing
opportunities tasks are limited (though

ownership, areas, saving However, household in the

saving

where the if

alternative drudgery a of

employment many

household of

may still be a benefit).

is used, to include

broader

definition

appliances

water

pumps and cornmills, other productive uses of electricity

One observer describes how these electrical
income families in the Mexican PIDER rural

home become possible. used by low

"appliances,"

Table 10.

Appliance Ownership In Some Rural Areas (% of electricity consumers owning)

Electric

Iron
Tisma, Colombia San Carlos, Costa Rica El Salvador India (some areas) OA (ordinary advanced) OB (ordinary backward) SU 1 (special under developed hilly) SU 2 (special under developed - tribal) 86.9 96.5 58

Radio
41.0 30.4 23

TV
12.6 24.6 39

Fan
-

Refrigerator
12.1 27.5 30

Stove
8.7 18.7 4

4.6 10.2 15.4 3.6

27.7 22.8 11.0 13.6

6.9 7.8 3.3 12.7

Philippines Cooperatives Owners

Users Non-cooperatives Owners

47
53 70

43
50 50

32
59 48

27
33 40

24
31 34

6
7 10

Users
Rural United States, 1930s

72
--

52
84.3 --

72
-

42
-

38
20

11
-

Sources:
J. Michael Davis, John Saunders, Galen C. Moses, James E. Ross, Rural
Electrification, An Evaluation of Effects on Economic and Social Chanqes in Costa Rica
and Colombia.
Report to U.S. Agency for International Development (Center for Tropical
Agriculture, Center for Latin American Studies, University of Florida, Gainesville,
Florida, 1973); U.S. Department of Agriculture, Rural Electrification Administration,
Rural Lines: The Story of Cooperative Rural Electrification (Washington, D. C., GPO,
1972); Operations Research Group, Consumer Response to Rural Electrification (Baroda,
ORG, October, 1977); Lalit K. Sen and Girish K. Misra, Regional Planning for Rural
Electrification.
A Case Study in Survapet Taluk, Nalgonda District Andhra Pradesh
(Hyderabad, National Institute of Community Development, 1974); National Electrification
Administration, Nationwide Survey of Socio-Economic Impact of Rural Electrification
(Philippines, NEA, June 1978); World Bank, Costs and Benefits of Rural Electrification:
A Case Study in El Salvador, P. U. Res. 5 (Waahi:iion, D. C., 1975).

25

development water and

project, grinding of home

have

saved

several

hours of work a day in lifting

corn for household use, permitting the irrigation and

gardens and resulting in greatly improved nutrition
personal communication, June 1979).

cultivation among

families

(Auguste

Schumacher,

Agriculture.

Though household benefits of electrification may be of some

importance, the more significant potential for economic development through

rural electrification and through the use lies in its use in productive enterprises, in

agriculture privately examines sector.

industry.

Electricity

for these uses can be generated

This section

autogeneration or publicly from the grid. and benefits of electrification

in the agricultural

Electricity can be used on the farm in three main ways.

First, it may

be used on a day to day basis by large commercial agricultural enterprises,

in heating and lighting for hatcheries and poultry farms, and milking

machines

and cooling for dairy farms.

There is evidence that the benefits

of electricity for those uses can be quite substantial (see table 16 below)
but they require may that a be can reliable used remove to and power continuous seasonally supply needed source. Second,

electricity equipment threshers, in

agro-processing

labor

bottlenecks

at harvest time, such as

hullers,

millers, and crushers.

These uses will be dealt with

the following section. 8

Third, electricity can be used for irrigation:

this section concentrates on this most important use.

The emphasis tubewells, analysis The the most in in here interesting electrification the will country has in this respect is India, where the
households to irrigation
The

shifted

from

interest of increasing agricultural productivity.

lean heavily on the Indian situation for this reason.

interest of the Indians in irrigation is understandable: 54 percent of

total variance in agricultural production for India as a whole is

8. In India, Electricity Board rules do not permit these "non agricultural" uses on an agricultural irrigation connection because tariffs
are lower for irrigation than for agro-processing. This is also a reason
for the extreme underutilization of pumpset motors, which could potentially
be used for these purposes as well.

26

explained Gujarat

by and

irrigation, Rajasthan as are

and

that

variance

increases to 70 percent if

consumption India Nadu) percent of than clear

excluded (NCAER, 1978, p. 109). Agricultural

a percentage of total electricity consumption in states of

(including metropolitan areas) has been as high as 29 percent (Tamil

t.) 39 percent (Haryana), although the average for all India is 12.6
(Sen Gupta, 1977, table 4). Referring back to table 4, the share
in total consumption in the Indian projects is much greater

irrigation that of

any other country; however, looking again at table 2, it is

that the electrification of tubewells has not taken place on a scale

as wide as was originally hoped for.

The value results impact of irrigation on a suitable area can be dramatic, with the
of output often increasing severalfold in a short period. Some
for India output are can given in table 11. An increase in value of
come from (a) an increase in irrigated area, (b)
able to grow another crop or even two

agricultural greater during

cropping the

intensity--being

dry season or (c) a change to higher value crops which require

This last appears important in the Indian areas surveyed. Pattikonda Taluk, a 20 For
percent increase in irrigated area

irrigation. example, resulted in in

a Rs. 271,000 increase in the value of agricultural output in

that Taluk, primarily due to the switch from lower value grains such as
korra, jowra, and baJra, to paddy, groundnut, vegetables, and other higher
value cash crops. The change in output and cropping patterns in newly
irrigated areas due to electrification is even more striking.
Lift irrigation most benefits per is se. can be accomplished quite effectively using diesel
irrigation cannot therefore be attributed to
Since both diesel and electric power can lift

motors;

from

electrification water, relative which

costs,

what produces most of the benefits here, a comparison of

examined in the section on costs below, is of interest.

Diesel and electric pumps can also be compared in terms of their effects on
output; table 12 illustrates one such comparison with inconclusive results.
The in returns from any sort of tubewell irrigation are apparently quite good
these schemes. In two of the three, use of both diesel and electric
In this case, the availability of

pumps had the best returns per acre.

Table 11.

Changes in Agricultural Output and Value with Electrification of Tubewells, Kurnool District,
Andhra Pradesh, India
(% change and Rs. thousands)
Electrified "Old Wells" Pattikonda Taluk Dhone Taluk Pattikonda Taluk New Wells
Dhone Taluke

% change
irrigated area Paddy Korra Jowar Hybrid Joward Bajra Wheat Groundnut Chillies Vegetables Tomatoes Onions Cotton Subtotal: Increases in crop value Subtotal: Decreases in crop value Net Total 20
-

% change
crop output 173 (-)94 (-)100

change in value of output 81 (-)1 (-)18

% change
irrigated area 60 (-)100 .....

% change
crop output 150 (-)100

change in value of output 5 (-)2

% change crop outputs new .--

change in value of output 23

% change crop output& new (-)95

change in
value of
oJtput
278 (-)36 (-)18 11 -

63 (-)100 (-)100 .. (-)100 new 43 78 42 39 54

--

(-)100
.... (-)100 hev 288 new new new 22 36 7 9 201 new new new new
-

(-)5

(-)97

.......... (-)100 new 76 348 71 63 116

--

new
(-)1 .75 12 19 2 4 2
--

(-)3 6 88 88 15 7 8

..... ..... 288 new new new ...--

(-)55 new new new new new

(-)71 155 22 8 12 3 489

293

79

62.75

-22 -271 248

-

-2 77

-6 56.75

125 364

Source: Small Industry Extension Training Institute (SIETI),SIETI, Impact 1978. of Electrification on Rural Industrial Development: A (Yousufguda, Hyderabad, study in Kurnool District, Andhra Pradesh aThis is the amount of the change in agricultural production that can be attributed soley to electrification, obtained by
applying a factor for each crop.
A1 - a1
where A1 new area irrigated and a1 = old area irrigated a1
for old wells, to the increase in agricultural production in new well areas.

28

Table 12.

Returns Per Acre, Using Electric, Diesel, and Both Electric and
Diesel as Motive Power for Tubewells, Rural Gujarat, India (Rs.)
a ch Una Scheme a Electric Diesel Both BayadModasa Scheme Electric Diesel n Kodinar Scheme Both Electric Diesel Both

Gross value
of output/
acre Costs/acre Net returns/
acre Benefit-cost
ratio

1,118 461 657 2,43

801 361 440 2.22

1,103 300 713 3.68

889 432 457 2.05

830 303 527 2.73

894 242 652 3.69

1,187 654 533 1.81

1,305 794 511 1.64

1,532
962
570
1.59

Source: Shreekaut Sambrani, Gunvant M. Desai, V. K. Gupta and P. H. Shiugi,

Electrification in Rural Gujarat: Vol. I Kodinar Rural Electricity Cooperative
Ltd! Vol. II Una Scheme: Vol. III Bayad-112dasa (Amhedabad, Center for Management
in Agriculture, October 1974) pp. 66, 86, 116.
aRabi (irrigated season only).

29

diesel as well

as

a backup to a variable electric supply may have been important,

as possible economies of scale--users of both diesel and electric
had the largest land holdings, with diesel-irrigated holdings

pumps

also

second in size, and electric last.

There is also more some evidence that the small farmer may benefit

proportionately

than the large farmer from irrigation, primarily due

Note that in table 13, the

to more intensive cultivation by small farmers.

increase in income per hectare for smaller farmers was in nearly every case
greater than that for larger farmers.
Nonetheless, necessary Gravity such or before rain a close examination of the hydrology of a region will be advocating fed tubewell (water lifting) irrigation at all.

irrigation is sufficient in many areas in countries

as Indonesia and the potential for tubewell irrigation may be limited

1979, p. 42). Indeed, in some electrified areas of India as

(McCawley, well,

groundwater

availability or quality is insufficient to run pumpsets

for more than a few hours a day if at all (Sen Gupta, 1977, p. 62).
Industry. difficult some benefits output or to Industrial uses of electricity are many and varied. It is

imagine any modern large-scale industry without electricity;

industrial uses are listed in table 14. Industrial

small-scale

from electricity use are of two types: cost savings and increased
profit, including the use of new processes only possible with

electricity.

Cost differences are discussed in the section below on costs

and pricing; here the general results of electrification for new industries
and industrial ways area, in expansion in an area will be briefly examined. There are
several in an of looking at the impact of electricity on industrial output
none of them 15--to entirely cite the satisfactory. number The most common is

illustrated appeared

table

of industries which have

since grid electrification.

Another is to estimate the change in

profits after electrification (this could also be done for autogeneration),

also used in table 15 (although the data do not give any idea of how large
Most new rural industries
of the same and type as
nut

this change is in comparison with past profits). in these Indian cases flour appear mills, to oil have ghani been

previously--small

(presses),

ground

crushers--without introducing any new processes.

Table 13. Additional Income Realized by Pumpset/Tubewell Users After Electrification, by Size of
Holding, Madhya Pradesh and Uttar Pradesh, India (Rs.)

Average increase in income per hectare (Rs.)

Size of cultivated
holding (hectares) Less than 2.0 2.1-5.0 5.1-10.0 More than 10.0 All classes Pench 1,136 626 349 178 419 Depalpur 1,176 627 277 114 178 Modinagar 1,563 891 1,127 1,429 1,107 Chandauli
1,250
449
293
122
292

Source: Council of Applied Economic Research, Cost Benefit Study of Selected Rural Electrification
Schemes in Madhya Pradesh and Uttar Pradesh (New Delhi, NCAER, 1977).

31

Table 14.

Uses for Electricity in Small Industries, India

Blacksmithy

Coal oven, power blower, metal hacksaw, bench drill grinder, sheet cutting machine

Brass smithy

Polishing machine, gas welding unit, power blower

Carpentry drilling equipment, wood

Wood turning lathe, bench cutting circular, power driven hand tools

Leather footwear Oil Ghani

Power grinder, swing machines Power ghani (crusher), crushing miller, seaver

Pottery Weaving

Pottery wheel Semi-automatic loom

Source:

Small Industry Extension Training Institute

(SIETI) Prospects for Modernising Rural Artisan Trades and

Decentralized Small Industries (Yousufguda, Hyderabad, 50045,

32

Table 15.
Number of Industries Before and After Electrification, Indian Schemes

by Size of Village
Pench Depalpur Modinagar Pattikonda Dhone

Size of village
Less than 750 750-1,500 1,501-3,000 More than 3,000

BE
1 9 6

AEa
7 15 15
-

BE
3 5
-

AEa
8 8

BE
-

AE
-. ..

BE

AEb

BE

AEb

3 7 5

6 11

.
. .

. . .

. .
.

.
.
.

14
31

Total Average increase

in net income
per user (Rs.) Notes:

16

37

16

15

32

41

660

573

3,139

BE = Before Electrification; AE - After Electrification.

Sources: Small Industry Extension Training Institute, Impact of Electrifi cation on Rural Industrial Development: A Study in Kurnool District, Andhra
Pradesh (Yousufguda, Hyderabad, SIETI, 1976) and National Council of Applied
Economic Research, Cost Benefit Study of Selected Rural Electrification Schemes
in Madhya Pradesh and Uttar Pradesh (New Delhi, NCAER, 1977).
aone year after electrification.
bup to twenty years after electrification.

33

Anecdotal small

evidence

is

used, too: by auto a

for example, one report cites 515

electric shops, cooperative box factories, in the
small

businesses

serviced new

rural repair

Philippines,

including

sawmills, hollow block factories, wood and furnitures, a movie theater, and
five report new medium and large-scale industries (Herrin, 1979, p. 71). from Latin America cited Another

the increase in business in commercial

establishments due to customers coming in to watch television (Davis, 1973,

p. 181). While or subjective, grid this information probably is has nonetheless useful:
led to increased

autogeneration industrial all these and new

electrification

commercial value produced in many areas. industries and changes in

But to attribute

output to electrification is

undoubtedly a mistake, especially since the causal link between the two has
not been satisfactorily described.
A case third studies approach has tried to estimate the difference in profits for
of businesses using alternative forms of energy. This

approach yields the result that in many cases the net benefits available to
industry from using central grid electricity may be quite high: table 16

compares the profits of a number of businesses using their actual source of

energy and a hypothetical substitute. less from to even Profits in this sample are generally

using alternative energy sources than using electricity--net benefits

electricity are from 0.6 to 100 percent of profits. It is difficult

generalize using this case study method, since as table 16 illustrates,

in an electrified area, electricity may not be the cheapest form of

supply.

Indirect Benefits
Electrification on economic in rural areas may have significant indirect effects
through (1) social and public uses, (2)

development,

employment, (5) impacts

(3) environmental improvements, (4) foreign exchange savings,

on migration and fertility, (6) political stability, and (7)
In some cases, these benefits may be
However, many of these developmental
effectively, be achieved through other

encouraging innovation and modernity. of some considerable also, importance. more

goals means.

could

perhaps

Table 16.
Case Studies of Comparative Benefits of Centrally-Generated Electricity and Alternatives for Industry,
El Salvador
(Salvadorian colones)

ACTUAL Type of Energy Coffee Processing C1 C2 C3 Sugar Processing (large) S1 S2 S3 Sugar Processing (small) SS1 SS2 Rice Processing RI R2 R3 R4 Corn Mills HI M2 M3 Poultry Farms PF1 PF2 Shop Refrigeration RFI RF2 Portable Water Pumping W1 W2 W3 W4 Milk Cooling MC2 MC3 MC4 Annual Production Profits

WITH SUBSTITUTE Type of Profits Energy

Net Benefits of Electricity

Percent of Actual Profits

Steam Diesel Electric

0.5m lbs 1.2m lbs 2.2m lbs 3593 tons 46818 tons 2909 tons

18861 41830 49356

Electric Electric Autogen.

17781 42351 46020

-1080 521 3336

-5.7 1.3 6.8

Autogen. Autogen. Autogen.

0.20m 2.99m 1.16m

Electric Electric Electric

0.22m 2.86m 1.10m

20939 -124114 -66468

10.5 -4.2 -5.7

Oxen Electric

8 tons 97 tons 932 191 1846 5455

177 1569

Electric Diesel

158 1387

-19 182

-1.2 1.3

Electric Diesel Electric Electric

tons tons tons tons

113509 -3598 261073 813920

Diesel Electric Diesel Diesel

112879 -3943 260289 809551

630 345 784 4369

.6 9.6 .3 .5

Diesel Electric Electric Electric Flectric

.18m lbs .47m lbs llm lbs 1.31m.eggs 4.02m eggs n.a. n.a. .12m 20.0 m .09m .03m gal gal gal gaL

351 2874 127 24945 132347

Electric Diesel Diesel Autogen. Autogen.

475 2569 -17 24790 131353

124 305 127 155 994

35.3 10.6 100 .6 .8 100 1004.7 4.6 1.0

Electric Electric Gasoline Electric Oxen Manual Electric Electric Electric

119 120 n.a. n.a. n.a. n.a. 33828 20710 43855

Kerosine Kerosine Electric Diesel Electric Electric Autogen. Autogen. Diesel

-431 -380 n.a. n.a. n.a. n.a. 32238 19750 43412

119 120 -41 1985 597 6 1590 958 443

0.71m bottles 0.44m bottles 0.73m bottles

Source:
World 'ank, Costs and Benefits of Rural Electrification: (Washington, D.C., World Bank, 1975, p. 100).

A Case Study in El Salvador, P. U. Res. 5

35

Social vocational clinics, to benefit

and

Public

Uses.

Electricity can be used for lighting and

teaching public the

in schools, sterilizationl and refrigeration in health

water systems, and street lighting. Such uses are likely
poLr disproportionately, especially if these are offered
Some have argued that these public benefits
higher-income the to be to

free or nearly free of charge. are indeed likely which

more important for the poor than are household

reach groups to a large extent,
of social uses of
subsidization

benefits, therefore

tend

possibly

justifiz

electricity (Tendler, 1978),

causation in public health benefits would appear to be the
investment in a school or health clinic, rather than the marginal advantage
of electrification. Certainly electrification does not often induce health
clinics or schools to be built, unless it is part of a larger developmental
package. Iublic water systems may he extremely important in improving
health, but may be powered by diesel engines or use artesian flow.
Street lights appear to have benefits in making people feel more
secure and in some cases extending street businesses into the night.
Street towns have lights, and only however, villages one are less likely to be installed in poor areas of
(Selowsky, 1976), and many Indian villages reportedly
light The major

(the State Electricity Board will install a

street light if there are ten domestic connections in a village).
Another benefits semi.-public renting use of of electricity that may have considerable
is the space by individual families in commercial

street

refrigerators prolonging nutrition.

These the

in bars and stores, which by preventing wasteage of food and

supplies of protein sources, such as chicken, can improve

public and social uses of electricity seem of some interest for

benefits of electrification for the poor, and merit further
Employment benefits from productive uses of electricity
and industry could be significant; these benefits are
expansions for the in output already discussed and (2) the
The employment uses, benefits of
since more
for output.

investigation.
Employment. in agriculture to of related existence

(1) the

a market are

energization

probably

greatest

irrigation

36

labor-intensive

crops are often grown with irrigation and the agricultural

season is lengthened. But these benefits are more due to water--which can
be lifted using various energy sources--than to electricity. In small
industry, marketing may be a significant problem with increasing output,
and employment could even decrease with electrification (or other measures
to If output and incomes are rising generally in
an area, however, markets for small industrial output will also be
increasing, and employment effects would be positive on net.
Environmental Improvements. The major'energy related environmental
problem in developing countries is deforestation and erosion caused by
fuelwood gathering for cooking--the largest use of energy for the poor--and
heating.
returning substitute substitution 1978, p. 25;

increase

productivity).

Another
it for for to wood

problem may
the soil or or as dung in

be

the
these

uso
uses,

of dung as fuel instead of

Electricity is not often a

though there may be some

fertilizer.

wood

charcoal in ironing (NCAER, 1978, p. 105; NEA,

However, there has been growing

World Bank, 1975a, p. 69). in

substitution

cooking in areas like Latin America where electrification

The major alternative fuel to electricity in practice
but air pollution problems of kerosine in the

has been widespread. is often kerosine; are

countryside wood their used burning

minor,

although in the household smoke from kerosine and

Diesel engines are notorious, too, for

could

be a problem.

noise, fumes, and smell. for centrally-generated

But these environmental minuses would have

electricity, taking into account differing

to be compared with the pollution produced by the fossil fuel energy source

efficiencies as well.
Foreign Exchange Savings. by electricity for lighting The substitution of kerosine and diesel oil
and motive power could be a net benefit in

foreign exchange savings--if the central supply is not based on oil imports
as well. In India, for example, central grid electricity is generated
using

mainly local coal and hydro, while diesel and kerosine are imported.
in the efficiency of burning fossil fuels in autogenerators or
Foreign
station facilities would also have to be considered here. savings also

Differences central exchange

will not have an infinite value, so these benefits

37

should be measured in terms of a "shadow exchange rate" expressing the true

9
value of a foreign exchange to the economy.
Impacts on Migration and Fertility. Electricity is often thought to
have an impact on reducing rural migration to cities through its effects on
levels evidence an no be of of living, employment, and incomes. The World Bank has found no

this result (World Bank, 1975b, p. 7), and in any event, such
The fact is, there appears to be

effect would be difficult to monitor.

evidence on this issue in one direction or another; but if a link could

drawn between electrification and development in rural areas, reduced

migration to cities would be a plausible side effect.

Impacts fertility programs, study on fertility likely the that the it is be are similar. higher The most direct and effects on

will to

through

incomes

family planning
One

extent birth

that electrification contributes to these. rates in

found in

electrified areas of Misamis Oriental

Province 17). already whether

Philippines have dropped fairly steadily since 1971, and

not clear from that data (a) whether birth rates were
in the electrified area before electrification or (b)

faster than birth rates in areas electrified later or not at all (see table
But

dropping

income or other developmental differentials in the electrified and

areas might better explain the results. In addition, a

unelectrified national late

population program was launched in 1970 (electrification began in

and economic development in the area appeared to be advancing
Agrin from such an effect on birth rates is plausible, if the
Another
electrification to development to birth rates.

1971), is

generally. linkage

study in the Philippines found that 22 percent of electrified families used

family planning, versus 19 percent of nonelelectrified, with 17 percent and
23 percent pregnancy rates respectively (NEA, 1978, pp. 38,39). also clear from But it was

the study that electrified households had higher incomes

and socioeconomic status than unelectrified ones.

Political Stability. Philippines, where a (and The only evidence on this point is also from the
commitment was made by the government to
rural programs) as a means of wining support

major other

electrification

9. For a full discussion of the calculation of shadow foreign exchange

rate, see Squire, 1975.

38

Table 17.

Crude Birth Rates, Misamis Oriental Province, 1971-75

1971B 1972A 1972B 1973A 1973B 1974A 1974B 1975A

Rural west (early electrification) Rural west

(later electrification)

45.8
--

39.6
--

48.0
--

38.0
--

39.1
51.1

31.6
32.1

31.1
39.3

29.9
35.6

Rural east
(no electrification) .. .. .. .. 40.9 35.7 40.3 35.5

Source: Alejandro N. Herrin, "Rural Electrification and Fertility Change in

the Southern Philippines," Population and Development Review vol. 5, no. 1
(March 1979), p. 67.

39
away from the Communists in the countryside (Tendler, 1978, P. 5).

According A later

to a survey in the Philippines, this strategy worked quite well.

survey with of the the "perception of of change in the peace and order
that 84 percent of

situation

coming

electricity"

showed

electrified households and 78 percent of nonelectrified households believed

the situation was better, with 14 to 19 percent believing the situation was
the not same (NEA, 1978, p. 27). have been as important, The effects of electrification in itself may
however, as was its evidence of a strong

government commitment to the improvement of the rural areas.

Innovation inducing attitudes p. 7). in and Modernity. "Electricity is a potent instrument for
the forces of change in stagnant
(SIETI, 1976,

modernism...it and

strengthens

responses to opportunity of the rural folk."

Implicit here is the idea that the true benefits of electrification

areas are somehow greater than the sum of its parts, even using

rural

the broad framework chosen here.

Certainly, agent." Development leaders, difference villages 1971, p. the in was One of electrification study India major the in can potentially be important as a "change
the 1960s by the National Institute of Community
that apart that from the influence of local
seemed to make a substantial

concluded village

resource

the level of adoption of agricultural innovations in Indian

availability But credit, of electric power (Fliegel and coauthors,

103). as

a change in the availability of any key productive

land, or technology--could have a similar effect
Clearly, if all inputs are lacking, either

input--such under they be

the right circumstances.

all must be provided for development to take place, or one input must
the stimulus for entrepreneurs to secure the others. electricity has an especially important A key question is

whether areas.

role to play in rural

Comparative Costs, Pricing, and Subsidies

While for electrification

has

considerable direct and indirect benefits

and industry in rural areas, these benefits

households,

agriculture,

come at some cost.

Since resources invested in rural electrification will

40

other pressing uses in developing countries, comparing benefits minus

coats, or net benefits is of great interest in looking at the impact of
electrification on economic development in rural areas. same tasks electricity the major central is In many cases, the
can be accomplished using alternative sources of energy; or if
desirable, by using autogeneration instead of attaching to
Under in costs, this section will focus on some of the
to central-station electricity in rural
These alternatives are autogeneration
practice grid.

have

alternatives

areas, for performing similar tasks. of electricity for

all uses, kerosine for household lighting, and diesel

engines for water lifting in agriculture and motive power in industry. The
from traditional and renewable energy sources as substitutes for
electricity are not considered here. Pricing and the operation of
subsidies are discussed in the last part of this section.
potential

Autogeneration Versus the Central Grid

costs of electricity in rural areas are higher than in urban
areas due to the dispersed and low nature of demand. Costs for
autogeneration of electricity versus centrally-generated supplies depend
upon at least four elements:
(1) The cost of generation. In Pakistan, for example, central
station electricity is generated using cheap hydro and natural gas with few
alternative uses. Autogeneration using mini-hydro may also be very cheap.
If for fuel In excess capacity exists in the central facility, the cost of generation
Rural loads may also be off-peak for the system as a whole.
supplying more kilowatt-hours to rural areas may be very low--only the
costs. Marginal

the United States in the 1920s, for example, one incentive for electric
utilities to expand service to rural areas was that urban summer
loads--which were only one-fourth of winter ones--could then be augmented
The extreme economies of
in electricity generation by seasonal farm irrigation and machinery demand. scale that hold

mean that at the generation

stage, grid power is likely to be much cheaper than autogeneration.

(2) Distance from the grid and density. The more remote the area to
be electrified is from the main grid, and the more dispersed demand centers
are (for example, isolated farms kilometers apart), the higher the costs of
transmission and distribution from the central generating plant.

41
(3) consumption for a the Load for factors. The load factor is the ratio of average t3 peak
If use and load factors are high, then costs

the system.

more capital-intensive central generating facility will be lower,

On the other hand,

since they can be spread out over more units of demand.

high load factor means high fuel and operating costs for autogeneration,
that cannot compete with the operating economies of scale of the

costs central load time

grid.

Often since

residential and agricultural users will have a low

factor

use is for only a few hours a day, usually at the same

lighting and morning for irrigation), while industrial
The rate structure is

(evening for

demand is more spread out through the day and night. often used

to improve the load factor for centrally generated electricity

by offering concessional rates to these uses with higher load factors.

(4) users are Other influences. often for the lines large Besides having a high load factor, industrial
but have low costs of connection and

consumers

servicing

utility. must be

The terrain through which transmission and

built and the existence of roads and other

distribution

construction-related

infrastructure

can also influence the relative costs

of autogeneration and the grid. The in table operation, percent interrelationship of these costs for one particular case is shown
18. and case, Capital the grid costs are more is are higher for the grid supply, but fuel,
higher for autogeneration. competitive than Even at a 10
autogeneration at 4
At a 50
maintenance

kilometers, but at 29 kilometers autogeneration is by far cheaper. percent

load factor, however, the grid is cheaper than autogeneration even

at 29 kilometers from the main grid.

Autogeneration cation. aptly is often only a preliminary step to grid electrifi

Electrification of rural areas typically proceeds in four phases,

described by the World ILank (World Bank, 1975b, p. 4). (but fairly large and productive First, a few

isolated

and thus able to afford the

capital investment and high cost of autogeneration) industries or farms may

generate possibly and their own electricity for dairy and poultry farms, mining, or
At this point, small farms

refrigeration

and lighting in shops.

industries are using small diesel engines, animals, or human labor for

motive power.

Table 18.
Typical Comparative Costs of Autogeneration and Central Grid, El Salvador (U.S. $ thousands)

Autogeneration Cost Components

Load Factor

Grid

10%
Annual capital costs
Fuel, operation, and
maintenance
Billing and
administration
Totala
Average kWh cost ()
4 km

29 km

25%
4,500

50%
4,500

10%
5,600

25%
5,600

50%
5,600

4,500

2,600

6,600

13,200

200

500

1,000

2,000 9,100

2,000 13,100

2,000 19,700

2,000 7,800

2,000 8,100

2,000 8,600

21
--

12
---

18
40

7
17

4
8

Source:
World Bank, Rural Electrification:
A World Bank Paper (Washington, D. C., World
Bank, 1975) pp. 20-21.
a Costs are for grid at 29 km only.

43

Later, small networks may form around autogeneration centers for other
households, businesses, and farms. In tix. third phase, these "microgrids"

and other major demand centers are connected and hooked up to the main grid
system. Finally, centers of low demand can be connected at very low
marginal cost.
In a sense, therefore, the question would be not autogeneration versus
the grid for areas where substantial population exists and incomes are
expected to increase, but one of timing as to when demand will justify the
distances involved. But for many isolated agricultural, mining, and other
Autogeneration may have to

long term,

uses., connection may be very long in coming. I0

suffice for many rural uses for a long

time--does this mean

higher energy costs for these consumers? above appear to refer to conventional

Not necessarily--the costs used

diesel autogeneration but small

generation units can be powered by a variety of sources including biogas,

Referring
wind, mini-hydro, and photovoltaic cells, where appropriate. back to table 16, it is clear that even in an electrified area, central
electricity may not be the cheapest form of supply. The coffee mill (Cl)
with negative benefits from (hypothetical) electrification was too far from
the transmission line to make a distribution line worthwhile; the sugar
mills (S2, S3) were generating their own electricity partly from sugarcane
wastes, and in another case production; and the purchased second hand. 1 1 sources of fuel (SS1), using oxen for a very low level of
water pump engine (W1) had been

gasoline-powered

The possibility that locally available renewable

or special circumstance might make autogeneration more

economical in eome cases needs to be further investigated.

In addition, there are a number of reasons why the net advantages of
the central grid may be overestimated in rural areas. Subsidies will be

10. Even in the United States, for example, the costs of running
electric lines to some rural areas of the West to operate water pumps for
cattle have caused farmers to turn to windmills for autogeneratin (Wall
Street Journal, 14 June 1979, P. 1).
11. It is also illuminating that investigators found that in every
case, businesse3 had on their own chose the profit-maximizing form of
supply, except where the producer had already bought other energy equipment
bpfore electrification.

44

discussed at length later.

As important may be the notorious unreliability
of rural power systems--which discourages productive applications in
particular. capacity half While maintenance problems and outages of autogenerating
are well known and expected, power shedding due to a shortage of
generating capacity in the central grid is not infrequent either: more than
of all consumers in "advanced" rural areas in an Indian survey
reported daily power cuts, and more than eighty percent weekly cuts. In
the Philippines, 77 to 96 percent of households in electrified areas
reported from one to ten power interruptions in the previous month (ORG,
1977; USAID, 1976). Voltage fluctuations can damage equipment or affect
its use as well. For both these reasons, many productive users of
electricity maintain back-up generators
at high cost. It has been argued
that the central grid transmits these outages and voltage variations to all
parts of the system, and that if losses from downtime were taken into
account, they might be less in total for autogeneration than for the grid
(Tendler, 1978, p. 45). But it is difficult to see why this should
necessarily be so: scarce technical indeed, maintaining autogeneration capacities demands
and managerial skills as well. The operation and

maintenance of small (40-1,000 kw) diesel generators has been reported

as
comparatively complicated and requiring unavailable technical
staff, with
equipment only lasting three to four years, according to developing country
representatives to an ESCAP meeting on rural electrification (McCawley,
One advantage to autogeneration not included in cost
comparisons is certainly that it spreads out capital costs
of
electrification by making small investments in capacity as demand develops,
thus minimizing the uncertainties inherent in projecting rural loads
It is nonetheless not clear on net whether
these uncounted costs of centrally-generated electricity are as important
in relative costs as the generation, distance, and load factor aspects
discussed earlier.
Other Fuels in Key Economic Development Uses
Kerosine in Lighting. It is difficult to compare costs of electricity
(Tendler, 1978, pp. 51-52). 1979, pp. 44-45).

45

with

those of other sources service provided by

for households, because in many cases the

electricity is so much higher quality

energy

(lighting), convenient (ironing), or unavailable with other energy sources

(TV) that the service is essentially a new and different one.
Lighting is one energy service in which, at least in rural areas,
electricty and kerosine may be substitutes to an extent, although electric
lighting kerosine is is higher quality as and more a backup convenient. to As table by 19 shows, electricity even often higher connected

often used Total costs

households.

for

energy are

for electrified

households than for unelectrified ones, but since these new and different
services are being used, such a difference is not surprising. The
this reason be expected to

introduction of electricity should not for

reduce total household expenditures on energy in most cases.

The cost comparisons--essentially for lighting--in table 19 are not
completely accurate, however, since the electricity charges include other
loads such as ironing and fans. A further complication is that electrified
households probably have higher incomes overall than nonelectrified ones,
so their total energy expenditures would likely be higher in any event.
More detailed studies of costs for comparable services and at the same
income level are necessary in order to make any more meaningful conclusions
here.
Water Lifting: Diesel Versus Electric. The most important use for

electricity in increasing productivity in agriculture appears to be though

powering irrigation pumpsets. grid for motive though power for The major energy alternative to the central
lifting water oxen, biogas in practice plants, and has been diesel
of

engines,

windmills,

autogeneration

electricity have also been proposed as alternatives.12 also often used for motive power in industry;

Diesel engines are

the costs and

many of

arguments presented below apply to industrial use as well.

12. Ramaswamy (1978) believes the existing stock of bullocks in India

are less expensive to use than electricity for shallow water lifting;
Bhatia's (1979) calculations show biogas as more economical in one rural
area of India than diesel, electric, or photovoltaic power; autogeneration
has already been discussed.

Table 19.
Household Expenditures on Electricity and Substitutes for Lighting, Selected Areas
(costs per month)

Candles % Using Cost

Kerosine % Using Cost

Electricity % Using Cost

Total Average Cost

Costa Ricaa
Electrified
Non-electrified
Colombiaa
Electrified
Non-electrified
Indiaa (Pench, M.P.)
Electrified
Non-electrified
India a (Depalpur, M.P.)
Electrified
Non-electrified
India a (Modinagar, U.P.)
Electrified
Non-electrified

16 75

.05 .52

47 74

.26 .45

100

2.14

2.48 1.05

41 98

.09 .51

81 83

.92 .74

100

.36

1.36 1.25

.20 .86

.79

1.00 .86

.22 .56

.54

.76 .56

.22 .75

1.34

1.56 .75

Sources:
J. Michael Davis, John Saunders, Galen C. Moses, James E. Ross, Rural Electrifica tion, An Evaluation of Effects on Economic and Social Changes in Costa Rica and Colombia.
Report
to U.S. Agency for International Development (Center for Tropical Agriculture, Center for Latin
American Studies, University of Florida, Gainesville, Florida, 1973) and Council of Applied
Economic Research, Cost Benefit Study of Selected Rural Electrification Schemes in Madhya Pradesh
and Uttar Pradesh (New Delhi, NCAER, 1977).

47

Costs of electric versus diesel pumpsets are much disputed.

As diesel
Table

prices continue to rise, their relative competitiveness will fall.

20 gives some ranges of costs of tubewells in India in the mid to late

1970s. Capital costs for electric motors are generally higher than for

diesel, while maintenance and operating costs tend to be higher for, diesel.
Downtime for repairs to diesel engines has been reported as high as 30
percent greater than for electric, but on the other hand, outages due to
load shedding may be as important for electric pumps. Convenience and
easier maintenance are often cited among the advantages of electric motors
(ORG, 1977, p. 148; NCAER, 1978, p. 159) while movability of diesel engines
is an advantage where landholdings are scattered. Administrative
roadblocks and delays in installing diesel engines are also reportedly much
lower (Child, 1975, p. 259).
Using a 10 percent rate for annualizing capital costs, electric motors
have a total cost advantage over diesel engines in table 20 in all but
Bhatia's social cost calculations for the Bihar area of India and in the
Chandauli scheme. Note, however, that the choice of a 15 percent rate
would make diesel engines cheaper than electric motors in four of the seven
cases--at their current oil prices. and electricity are subsidized in Furthermore, since both diesel fuel
India and many other deve)nning

countries, the comparisons in table 20--with the excepti of

Bhatia's--reflect only the private market prices, not the social costs of
supply. Bhatia's study, which gives shadow prices to labor and capital

inputs and, more importantly, costs electricity and diesel fuel at their
social cost, taking subsidies, costs. 13 for example, into account, shows a cost
advantage for diesel in Bihar, especially if the 15 percent is used for
annualizing capital This confirms a 1969 study which

13. Bhatia uses Rs. 1.6/liter as the social cost and Rs. 1.41/liter as
the market price of light diesel oil; and Rs. .12/kWh and Rs. .40/kWh as
the market price and social cost of electricity, respectively. Bhatia, in
fact, believes that the most economical energy source of all for water
lifting is biogas, if shadow prices for inputs and the social cost of
-pupply of diesel and electricty are used.

Table 20.

Comparative Costs of Diesel Engines and Electric Motors for Irrigation, India
(Rs.)
CAPITAL COSTS Electric Diesel OPERATING COSTS Electric
Power 0 & M Total Fuel 305 220 29 86 231 102 21 53 536 321
50
139
600
131 84 138 ANNUALIZED CAPITAL COSTS AT 1OZ Electric Diecel Total
793 228 171 195 615
445 366 336 495 433 255 390 1151 766
416 475
1288
661
426
585
TOTAL
ANNUAL COSTS Electric Diesel

Diesel 0 & M 193 97 87 57

Modinagar Chandauli Depalpur Pench Lalit Sen in

Ramsay Bhatia
Market Price Social Cost

6147 4454 3655 3364

4954 4330 2550 389/

4560 6075 7350

4720 3300
3150

1004 216 720

4 70a

1474 1416 1620

2215 630 720

500 1536 1236

2715 2166
1956

456
608 735

472 330 315

1930 2024 2355

3187
2496
2271

1200 900

Sources:
National Council of Applied Economic Research, Cost Benefit Study of Selected Rural Electrification Schemes
in Madhya Pradesh and Uttar Pradesh (New Delhi, NCAER, 1977); P.,msay, W . and J. Dunkerley, "Trip Report on India, January
1-17, 1979," Resources for the Future; and Bhatia, Ramesh, Energy Alternatives for Irrigation Pumping: Some Results for
Small Farms in North Bihar (Delhi, Institute of Economic Growth, 1979).
aIncludes maintenance and depreciation on mains, prorated.

49

concluded

that

although the privace

costs of irrigation with a diesel

engine were 50 percent above those for an electric motor, adjusting for
appropriate shadow prices, the social costs of diesel were two-thirds those
of the electric motors (Child, 1975, p. 259).

Pricing and Subsidies

Pricing. enormously Some representative charges for electricity in rural areas
Prices for power vary
.50/kWh for large Rates countries, from as low as by category of consumer are given in table 21. in developing

industry in India, to 160/kWh for domestic lighting in Mauritania. appear to Africa.

lower in Latin America and Asia, and highest in be generally

In general, domestic rates for lighting are in the 3-100/kWh

range, with domestic power (for appliances) only slightly lower on average.
High tension (large) businesses typically pay lower rates than low tension
(small to medium) businesses, with rates averaging around 1-90/kWh for LT
and 1070/kWh for HT. (Larger users will tend to pay towards the low end of
the prices, since most tariff structures are declining block: the first
block of, say, 50 kWh, costs 100/kWh, the next of 200 kWh costs 80/kWh, and
so on). Irrigation is in the 2-80kWh range, and public street lighting
also around 2-80/kWh.
Prices for electricity in rural areas should be typically higher than
in urban areas but below average costs in the early years of a project, (a)
because costs are very high before demand has developed to a reasonable
load factor, and (b) in order to promote the use of electricity and an
Thus at the
increase in the load factor (World Bank, 1975b, pp. 8-9). expect financial viabiity.14
beginning of a rural project, one would not
Often a rural electrification cooperative will be expected to cover

operating and maintenance expenditures out of revenues, while capital costs

are picked up by the central system or government. As the load factor and

14. The Rural Electrification Corporation of India expects negative

returns on projects in "ordinary advanced" areas up to the sixth year and
3.5 percent returns by the end of the fifteenth; for "ordinary backward"
areas, negative 3.5 percent at the end of the fifth year, breakeven at he
end of the tenth, and 3.5 percent after twenty years (SenGupta, 1979, P.

2).

Table 21.

Selected Variable Charges for Electricity (US per kWh) Commercial/ Industry (Low Tension) 4-2* 2* Large Industry (High Tension) 4-2*
9*

Domestic Lighting Power Ethiopia (EELPA) Ghana (ECG) 6-4* 9 2* 2*

Irrigation/ Water Pumps

Street Lights

Mali (EM) Mauritania (SAFELEC) Iraq (NEA) Syria (DES) Cambodia India Bombay Laccadine Islands Philippines (DAI, 1977) Camarines Sur I (1974) (1976)
Albay (1974) (1976) Thailand (MEA)

12-8 16 3 4 9 2 8

12-8

11-8 14

10-6 11* 1* 5-2 5 1-. 5* 8 6

8 14

1* 5-2

3 8 1 8
Ln

9 2-1 8

6 2-1 5-4

5 9
5 8 5-3

5 9
5 8 5-3

7 8-3
5 8-5 9-3

5 9

3 4
4 4

2-1*

Vietnam (SCES)

Table 21.

(cont'd.)

Argentina (SEGBA) Bolivia (DAI, 1977) El Salvador

CEHRL
CEL (El Sal, 1975)

3*
5

5*

5-4* 3

2* 3

2
8-3

3
5

6-2 4-2

6-2

6-2
5-1

CAESS (El Sal, 1975) Mexico (CFE)

Nicaragua (DAI, 1977)
ENALUF CONODER
Note:

2* 2-1*

2
2

3-1 3* 2 9-11 3* 2

3
3

2-1 4-1* 1 6

2-1* 2-1* 1
9-4*

2
1 3 3
1
3
5

may not be in rural areas but have been included for comparative purposes. Undated citations
are from Electricity Costs and Tariffs:
A General Study (New York, United Nations, 1972) and
are presumably from the early 1970s.
Where two figures are given, the first (usually higher)
is for the first block of power; the second for the last block or off-peak (the size of these
blocks varies from country to country). An asterisk means some fixed charge related to maximum
demand or other parameters is also charged in addition to
the variable charge given.
Sources:
J. Michael Davis, John Saunders, Galen C. Moses, James E. Ross, Rural Electrifi cation, An Evaluation of Effects on Economic and Social Changes in Costa Rica and Colombia.
Report to U.S. Agency for International Development (Center for Tropical Agriculturp, Center
for Latin American Studies, University of Florida, Gainesville, Florida, 1973); Development
Alternatives, Inc., An Evaluation of the Program Performance of the International Program
Division of the National Rural Electric Cooperative Association (NRECA). Report to U.S.
Agency for International Development (Washington, D. C.,
DAI, January 28, 1977); Peter McCawley,
"Rural Electrification in Indonesia--Is It Time?"
Bulletin of Indonesian Economic Studies,
(1979); Shreekaut Sambrani, Gunvant M. Desai, V. K. Gupta and P. M. Shiugi, Electrification in
Rural Gujarat: Vol. I Kodinar Rural Electricity Cooperative LTD:
Vol. II Una Scheme:
Vol. III
Bayad-Modasa (Amhedabad, Center for Management in Agriculture, October 1974);
United
Nations, Electrificy Costs and Tariffs: A General Study (New York, UN, 1972); World Bank,
Costs and Benefits of Rural Electrification:
A Case Study in El Salvador, P. U. Res. 5
(Washington, D. C., 1975).

Most charges are for rural areas;

some of the African and Middle Eastern utilities

52

density of use increases over time, however, returns should rise. continued shows), low use, declining block rates to large users (as table

But
21

and pricing below consumer's willingness-to-pay often combine to

In some cases, too, where use is low, expansion comes

frustrate this goal.

through extending the grid rather than through rising load levels.
Subsidies. Subsidies to rural electrification projects are general,

and of three main types:

(1) Cross-subsidies from one category of consumer to another, such as
from domestic to industrial uses. In Nicaragua, for example, domestic and

commercial use subsidizes irrigation and large industry (DAI, 1977, B-32).
The rates in table 16 may be somewhat indicative of cross-subsidies, but
not entirely so, since the marginal costs of supplying different consumer
varies; large industrial users will often have low connection, servicing,
and metering costs per user, as well as high load factors whiciz will reduce
system costs; while the per user fixed costs of connection, etc. for

residential and irrigation users will be high.

(2) take the Government subsidies to the rural electrification system often
form of interest-free loans, while operating and maintenance
In this case, other parts of
Often, however, even

expenditures are financed through revenues.

the economy are paying for rural electrification.

operating costs may not be covered in the early years: table 22 is the
financial statement for an Indian rural electric cooperative in its first three years. Excluding capital costs, the average per kWh subsidy varied

from .25 to .43 of a cent; and even as the load rose from 2.86 to 9.1 million kilowatt-hours sold, the percentage of subsidy did not drop consistently--from 17.6 percent of costs to 11.8 percent, then back to 16.6 percent. percent Another study in Nicaragua found marginal costs o! (residential) to 223.3 percent (irrigation) of from 29.5 prices for

electricity in 1975 (DAI, 1977, B-32).

(d) International loans at concessional rates are also a source of
Rates as

subsidies for developing country rural electrification programs.

low as 2 percent and grace periods of ten years or more are not uncommon by
international donor organizations for backward areas. It can be argued
that this capital still has an opportunity cost to the economy of the

53

Table 22.

Financial Statement, Kodinar Rural Electric Cooperative,

Gujarat, India 1970-1973
(U.S. $ and 0)
1970-71 1971-72 1972-73

Million units Cost of electricity kWh cost (0) Cost of electricity

plus operating expenses Total kWh cost (0) Sales revenues kWh sale price () Net loss Average kWh subsidy (0)

2.86
44634 1.56

4.59 74024 1.61

9.10
154024
1.69

62682 2.19 51585 1.80 5000 11.0%

95853 2.09 84390 1.84 11463 1L.5%

188780
2.07
157073
1.73
31707
20.7%

----------------------------------------------------------------Sambrani, Shreekaut Gunvant M. Desai, V. K. Gupta and P. M.

Shingi, Electrification in Rural Gujarat: Vol. I, Kodinar Rural Electricity
Cooperative Ltd; Vol. II Una Scheme; Vol. III Bayad-Modasa (Amhedabad,
Source: Center for Management in Agriculture, October 1974).
aConverted to U.S. dollars from rupees at 8.2 Rs/$U.S.

54

developing country involved, since

it would be loaned in that country in
any event for some other purpose. But this is less the case
where
specific funds
and lending rates assigned specifically for rural electri fication, as for example in recent USAID programs.
Effects of Electrification on Consumer and Producer Decisions
There is nothing if they inherently accomplish wrong the

with

subsidies for which

to
rural
they are

electrification

objectives

designed.
As has already been shown, household benefits from subsidies to
rural electrification rates, especially those other than lighting,
are
mostly received by the relatively better off in rural areas. Quite high
returns are experienced by production-oriented tables 11 and here as well. users of electricity, as
16 have shown, respectively, making subsidies unnecessary
The case for electrification (and for the subsidization of

electric rates) rests on the assumption that users will make different
decisions about consvumption, production, and location of enterprises on the
basis of thp availability and the price of electricity. This
section
argues that availability and reliability are more
important than price in
these decisions, particularly for new and productive
users, because (1)
electricity itself is only a part of the total
costs of using electric
power for households and business, and
(2) energy is only a small portion
of total operating costs of most businesses.

Households
The total costs of using electricity in households includes the costs
of connection and the cost of appliances, as well as the cost of electrci ty. Table 23 compares costs for
electricity and its substitutes. For
these uses, the costs of electricity itself are from 30 to 60 percent
of
the total costs of using electricity. Once expenditures on connections and
appliances have been made, however, the price of electricity will probably

55

Table 23.

Total Cost Comparisons Between Electricity and its

Substitutes, El Salvador (Salvadorian colones)

Connection Lights Iron Refrigerator Cooking 60 60 75 75

Electrical Appliances AppliElectri- Annual ance city Total 5/year 35 1,200 300 10 7 80 70 22 20 260 120

Substitute Annual Type Costs Kerosene Flat iron Kerosene Wood 7-13
5
500
'5

Sources: J. Michael Davis, John Saunders, Galen C. Moses, James E.

Ross, Rural Electrification, An Evaluation of Effects on Economic and Social
Changes in Costa Rica and Colombia. Report to U.S. Agency for International
Development (Center for Tropical Agriculture, Center for Latin American
Studies, University of Florida, Gainesville, Florida, 1973); U.S. Department
of Agriculture, Rural Electrification Administration, Rural Lines: The Story
of Cooperative Rural Electrification (Washington, D.C., GPO, 1972); Opera tions Research Group, Consumer Response to Rural Electrification (Baroda,
ORG, October, 1977); Lalit K. Sen and Girish K. Misra, Regional Planning
for Rural Electrification. A Case Study in Suryapet Taluk, Nalgonda
District, Andhra Pradesh (Hyderabad, National Institute of Community
Development, 1974); National Electrification Administration, Nationwide
Survey of Socio-Economic Impact of Rural Electrification (Philippines, NEA,
June 1978); World Bank, Costs and Benefits of Rural Electrification: A Case
Study in El Salvador, P. U. Res. 5 (Washington, D.C., 1975).

56

have more of an effect on consumption.15

But subsidies to electric rates

on consumption, unless

alone are unlikely to have a substantial effect

subsidies or liberal credit are also provided for connections and appliance
purchases.16
Irrigation
As in the case of households, total cost of electricity for irrigation
include costs of connection, pumpsets, and electricity. Connection costs
for pumpsets have been estimated by Bhatia at Rs. 3,000 higher than his
estimate of Rs. 2,075 for the electric motor itself (Bhatia, 1979, table
6). Total costs of connection, digging a well, and the electric motor in
India appear to range from Rs. 4,000 to Rs. 7,000 ($500-$850), making the
cost of electricity itself a fairly minor part of total costs. Subsidizing
electricity rates therefore is unlikely to have a substantial impact on the
decision to irrigate unless these other costs are also subsidized or credit
liberally provided, especially for small farmers. Lack of credit has often
been cited as an obstacle to small farmer irrigation: in parts of India,
for example, a minimum of 1.5 to 2.5 hectares of land has to be offered as
security for loans for pumpsets, where more than 30 percent of farmers own
less than .74 hectare (SenGupta, 1977, pp. 41-42). MORESCO, a Philippine

utility in a rural area near Manila, has lent money for electricity-using
irrigation pumps with some success (USAID, 1976, p. 45).
Furthermore, irrigation is only a part of total operating expenses for
a farm, which include purchases of seeds, fertilizers, implements, storage,
and marketing. Differences in the price of electricity are probably less
crucial than its availability and reliability; cases of farmers maintaining
both diesel and electric pumpsets have already been noted.

15. Although the case is cited of flat rates for electricity being so
low that customers leave light bulbs burning all month, in order to save
the filament.
16. One section of the U.S. Rural Electrification Cooperative Act
provided for loans to homes, farmers, and businesses in newly electrified
areas to purchase electricity-using home appliances, farm machinery, and
other equipment.

57

Large Industries
Autogeneration of electricity is a clear option for large industries
wishing to locate in an unelectrified area. A legitimate question then is
why large industries have not already located in an unelectrified area,
using autogeneration? the area becomes And why should large firms choose to locate there if
electrified, with possibly lower costs of

centrally

electricity?

One likely reason is electricity costs through autogeneration

on a small scale are often higher than the costs of centrally producing
electricity, due to lower marginal costs in the central system (with its
economies of scale and maybe hydro) and the fact that industrial demand is
often off peak load for the system as a whole (Selowsky, 1975).
Kilowatt-hours are only a part of the total cost of using electricity,
which includes motors and machines. In addition, electricity costs are

only a small portion of total costs of most large industries, as is evident

from table 24. electricity Only two industries of those likely to enjoy locational
greater than 10 percent of total costs. Marginal
advantages in rural areas--cement and pulp, paper, and paperboard--have
costs

advantages in the cost of electricity in rural areas are likely to have

little difference in locational or production decisions for most large
industries, therefore; availability and reliability may be more important.
For example, in Nicaragua, most agro-industrial users preferred central
station electricity for its convenience but also kept generators for

supplementary and emergency use:

milking cows, cooling milk, incubating

A hatchery (DAI, 1977,

eggs and lighting poultry farms requires continuous service. even had an automatic switching device to a gas generator

B-20).
Small Rural Industries
The !'ecord for establishment of new small-scale industries in newly
electrified rural areas is a rather poor one. One report from India cites

average new employment per year per taluka (sub-district) in industry in

Karnataka after electrification as six persons (SenGupta, 1979, P. 10).

Production decisions for small rural industries are a different matter than
for large. The costs of autogeneration per kilowatt hour are much higher

58

Table 24.

Share of the Expenditure of Electricity on Total Operating Costs,

Chilean Manufacturing Census 1967

ISIC Classification

Share of electricity in total cost (%)

201 202 203 204 312 205 206 207 208 209 211 212 213 214 220 231 232 233 243 241 291 293 251 252 259 260 271 272 331 334

Slaughtering, preparation and preserving of

meat Manufacture of dairy products Canning and preserving of fruits and vegetables Canning and preserving of fish and other sea foods Vegetable and animal oils and fats Manufacture of grain mill products Manufacture of bakery products Sugar factories and refineries Manufacture of cocoa, chocolate and sugar confec tionary Manufacture of miscellaneous food preparations Distilling, rectifying and blending of spirits Wine industries Breweries and manufacturing of malt Soft drinks and carbonated water industries Tobacco manufactures Spinning, weaving and finishing textiles Knitting mills Cordage rope and twine industries Manufacture of wearing apparel except footwear Manufacture of footwear Tanneries and leather finishing plants Manufacture of leather products (except footwear) Saw mills, planing, and other wood mills Wooden and cane containers Manufacture of cork and wood products (except
furniture Manufacture of furniture and fixtures Manufacture of pulp, paper and paperboard Manufacture of articles of pulp, paper and paperboard Manufacture of structural clay products Manufacture of cement Manufacture of cement products Manufacture of fiber-cement products Manufacture of plaster products

0.2
1.4
0.6
2.1
2.1
1.6
1.2
3.6
1.1
1.4
1.0
1.0
2.6
1.2
0.3
2.5
1.4
3.7
0.6
0.6
1.5
0.8
1.7
2.7
2.1
1.4
10.1
1.5
3.8
11.8
1.2
1.2
3.2

Source: Marcello Selowsky, The Distribution of Public Services by

Income Groups: A Case Study of Colombia, Part I (Electricity, Water,
Sewage) (Draft, Washington, D.C., World Bank, August 1976).

59

for very small scale use.

There is some evidence, too, that fuel costs are

a higher proportion of total production costs in small industries than in

large. pottery Table (29.9) 25 shows gur very high percentages for making (12.9). While flour mills total costs (25.7),
may be

and

underestimated here (it is not clear in the source whether figures given
for wages include self-employed labor of the artisan and his family), these
shares of energy in total costs are on the whole much higher than those for
large industries (total energy costs for large industries would be higher
if nonelectric sources were included, but it is hard to imagine them more
than doubling). Changes in the price of electricity might therefore have

more of an effect on production decisions of small industries than large.

Electrified capitalized profits per small rural industries as well a appear as to be more heavily
than nonelectrified, worker. Table 26

producing more

output and
in both

shows

steady

progression

capital-intensity and output per worker as typically small-scale industries

move from traditional production technologies to manually-operated

machines, and finally to electrically-powered machines, even those of very

small horsepower.
The incentives for electrification in order to achieve these higher
output and profit levels are weak for small rural industries, however. difficulties are twofold: productivity, and second, finding a market for the extra production. The

first, raising the necessary capital to improve

If no

markets can be found for extra production, then higher productivity simply
means less of employment, most not a desirable countries. result If in the and labor-surplus
incomes are

economies

developing

output

increasing generally with electrification, however, small industry output

of consumer goods and agricultural implements should have no difficulty
finding markets.
This problem of finding markets for increased production is especially
severe for small industries, that have traditionally sought local markets.
Such constraints on increasing output have been reported in Indonesia for
coconut sugar and bamboo proces.ing (McCawley, 1979, p. 42). One study

found that most artisans amid small craftspeople in several districts felt
there was no scope for using power in their work because there would not be
a demand for their goods or services if production were increased (SIETI,

60

Table 25. Fuel as a Percent of Total Production Costs, Artisan Crafts

a
and Small Irdustries, India

Industry

Percent

Black smithy Brass smithy Metal works Carpentry Flour mills Flour and oil Khandasari and oil Pottery Gur (palm) making Oil ghani Palm fibre

2.3-3.9
2.2
.1
.05-12.0
25.7
15.8
1.2
29.9
12.9
.3
3.0

Source: Small Industry Extension Training Institute (SIETI),

Prospects for Modernising Rural Artisan Trades and Decentralized
Small Industries (Yousufguda, Hyderabad, SIETI, 1978).
aTotal costs may be underestimated, since it is not clear %,hether "wages" include self-employed labor of artisan and family.

61

Table 26.

Labor-Intensivity and Productivity in Small-Scale Industries

With Different Production Technologies, India (Rs.)

Traditional

Manual Machines

Power
Machines

Black smithy labor/capital output/worker (Rs) Brass smithy labor/capital output/worker (Rs) Carpentry labor/capital output/worker (Rs) Leather Footwear labor/capital output/worker (Rs) Oil Ghani labor/capital output/worker (Rs) Pottery labor/capital output/worker (Rs) Weaving labor/capital output/worker (Rs)

.8 1,000

.25 1,750

(1.25HP)
.05
5,000
(.75HP)
.08
9,000
(4HP)
.05
5,500
(.5HP)
.18
7,200
(5HP)
.04
23,450
(I/8HP)
.2
1,875
(lHP)
.08
10,000

1.33 1,750

.8 4,000

.4 1,750

.2 2,500

6.67 1,800

2.0 2,438

.28 6,750

.13 14,750

4.0 1,000

1.33 1,250

.73 1,350

.50 3,000

Source: Small Industry Extension Training Institute (SIETI),

Prospects for Modernising Rural Artisan Trades and Decentralized
Small Industries (Yousufguda, Hyderabad, SIETI, 1978).

62

1976).

This problem is further complicated in India by the common contract

system, whereby a trader provides raw materials on credit, then deducts

their cost from the sale price he gives the artisan, effectively paying him
wages. Cooperatives in some localities have helped artisans with marketing
Frequent powei cuts and shortages were also often
(SIETI, 1978, P. 13).

given by craftsmen as disadvantages of electrification, indicating that

reliability of supply may be as valued in small industries as in large
(SIETI, 1978, p. 13).
An important unresolved problem in this research is therefore whether
rural small industries--where cheap electricity could on a priori grounds
be an important stimulus--can be expeditiously developed by a well-planned
program that provides other key factor inputs (and necessary

infrastructure) to potential entrepreneurs.

Conclusion

Rural electrification is commanding large sums of investment capital

and subsidies in developing countries, on the assumption that the benefits
in terms of raising living standards and economic development are

commensurate.

This working paper has examined scattered evidence from some

rural electrification experiences, with a view to making some preliminary

assessment of their success. Without more systematic studies, however, a

primary focus here must be on indicating the kinds of data that should be
gathered and analysis that ought to be attempted in future rural

electrification programs and

research, in order to better establish the

relationship between rural electrification and development and provide an

improved basis for policy.

Summing up

Sectoral Patterns. Benefits from electrification are related to use,

and the first point that stands out is that use of electricity in rural
areas is very low compared to industrialized countries or to urban areas of
developing countries: geographic coverage in rural areas tends to be

limited, and actual users within electrified areas are a small percentage

63

of

the

population,

perhaps

10

percent

in

many

cases.

Coverage

and

quantiti i used appear higher in Latin America than in Asia, with Africa at
the low end. Sectorally, residential use is about a third to one-half or
more of the total in most projects, and productive uses--industrial,
commercial, irrigation--make up most of the remainder.
Geographic and Income Equities. In general, larger and more advanced
localities are more electrified than smaller ones, and tend to be better
able to reap the benefits of electrification to households, agriculture,
and industry. The often small percentage of the population that use
electricity in rural areas tends to be drawn disproportionately from the
relatively better off, but there is evidence on the other hand that the
poor do value electricity and in some cases are willing to allocate a high
proportion of their income to its use. event, with the predominant which uses Amounts consumed are low in any
being lighting electricity and ironing.

often

Appliance

ownership,

largely

determines

consumption,

correlates highly with income.

Productive Uses. The most significant potential for economic
development through rural electrification lies in its use in productive
enterprises, in agriculture an, industry. High returns to tubewell
irrigation using electricity, to small as well as to large farmers, have
been experienced, due to increasing cultivated area, more intensive
cultivation, and changes in cropping patterns. But these benefits are
clearly not attributable solely to electricity, since diesel-powered

irrigation also has quite high returns.17 of electricity on the other hand

Industrial benefits from the use

quite high as compared to

appear

alternative energy sources.

Some of the major reasons often given in favor of
rural electrification are the indirect benefits which are expected to flow
from the introduction of a major modernizing catalyst into an area. These
Indirect Benefits.

17. Naturally, the applicability of water-lifting irrigation to rural

areas is also not general, since gravity and rain-fed irrigation is
possible in many areas, and groundwater appears insufficient for tubewells
in others.

64

are difficult to measure, and it is also fair to say that little effort has
been made to measure them. Two important facts must be borne in mind.
First, some of the indirect benefits might be more effectively achieved
through other means, and second, it is in practice difficult to separate
the effect of electrification from other aspects of economic development
which often accompany schools and health it. In any event, social and public uses as in
for street lighting, and for commercial
clinics,

refrigeration that is rented to households could be beneficial to the poor

in particular. It is likely that employment impacts of electrification
would be positive in agricultural use for irrigation, but could be negative
in industry in the absence of more general economic growth. Environmental
and foreign exchange impacts are secondary and not unambiguously positive
on net, but this depends largely on the fuel used f",, generating central
station electricity. are probably Effects on fertility and migration may be present but
more to general economic development than to

related

electrification.

The impact of electrification on modernity and innovation

probably been important in some cases; effects of electrification but the other together with

in the countryside has possible "synergistic"

productive inputs are a key question. Costs of Autogeneration. Costs of autogeneration versus central grid
electricity depend on the cost of generation, the distance of the area to
be electrified from the main grid, the density of consumption, the load
factor of demand, and other factors. demand. But many areas In general, autogeneration is more
expensive than the grid except for remote areas with very low and scattered
in developing countries are of this type, and
autogeneration may still have to be used in such areas for a long time in
the future. Even in electrified areas, centrally generated electricity
could be more expensive than autogeneration, depending upon the
circumstances: the availability of local renewable fuels is one factor.
Subsidies are

The net advantages of the grid nay also be overestimated.

often concealed, and costs to consumers and society in terms of outages and
voltage fluctuations are not counted. Still, the low costs of generation
of central station if grid electricity electricity is may outweigh these considerations,
especially

generated with low cost domestically

available fuels such as hydro, coal, and natural gas, while autogeneration
uses imported diesel oil or gasoline.

65

Costs some

of Alternative

Energy

Forms.

Scattered

cost comparisons

for

of the major alternatives show that

to electricity in practice in developing

electricity is often more expensive

countries

for households,

than kerosine for lighting but t~rat this may be because use and quality of
lighting are greater and incomes higher in electrified households. Water

lifting costs for diesel engines versus electric motors are much disputed,
and are very site-specific since grid costs are related to the distance
from the main grid and the load. The choices of a true cost of capital and

a shadow price for foreign exchange used to buy diesel are also key here.
This analysis will change, too, as fossil fuel prices rise, since costs of
central electricity supplies will not be afected proportionately due to

cheap hydro and the large share of transmission and distribution costs in
central grid electricity.
Prices and Subsidies. Prices for electricity in rural areas vary

greatly, but are reported as high as 160/kWh in some cases, even for the
grid. Subsidies appear common, especially in the early years of rural

electrification, with cross-subsidies from households to productive uses,

capital subsidies from other government revenues, and loans at concessional
rates from international donor organizations being the most usual forms.
Effects produce on Production. A key question is whether these subsidies

the desired

primarily

effects, since those to households appear to benefit

the better o.f, and productive uses of electricity seem quite
The availability and reliability of electricity appear more

profitable.

important than its cost for most productive uses, as evidenced by the use
of backup generators for both irrigation and industry in rural areas.

Subsidies to electricity may sometimes make little difference in production

and locational decisions, particularly for new productive users, since

electricity is only a portion of the total costs of using electricity, and

energy costs are just a small part of total operating costs for most

enterprises.

For households the costs of connections and appliances can be

30 to 60 percent of the total costs of using appliances, and the share of

electricity costs in total operating costs of farms and industries is in
many cases around are

3 to 5 percent.
of course,

Once

investments will

in

appliances

and

connections

made,

subsidies

more -likely influence

66

For small rural industries, price may be

more of a factor,
since energy costs are a higher proportion of total costs, though
reliability still is somewhat
important. Other factors such as the
availability of credit and marketing are probably even
more crucial for
small producers.

consumption.

Research Recommendations Large sums of money electrification while

are

currently

being

expended

on

rural

lacking a clear notion of its impact on economic

development. The devotion of a part of these funds to research on some key
unanswered question about this relationship therefore appears Justified.
This working paper has based some limited conclusions on scattered data and
anecdotal evidence:
but the nL.J for systematic research in this area
is
clear, including analysis of:
(1) Alternatives to electrification. Electrification may not be the
most important need for backward areas, or
for poor people in electrified
areas. Subsidies to other forms of energy, to other basic needs such as
food or clean water supplies or to income-generating opportunities might
make more sense if the poor are
the target group. On the other hand,
electrification may facilitate these other goals, and the feedback effects
are complex and deserving of study.
(2) Alterntives to the central grid.
Using social cost calculations
and examining particular circumstances will energy has likely show other ways of
generating economical electricity or other than

alternatives

sources entirely
as often more
been supposed. In addition,

autogeneration may be the only choice in many localities for a long time in
the future, and the potential for locally available renewable means of
autogeneration or motive power shoula be
explored. The effects of rising
oil prices in the future on
the relative costs of autogeneration and the
grid could be critical.

67

are

Subsidies and effects.

The true costs of rural electrification
often obscure, making it impossible to make judgments about net

(3)

benefits.

In particular, the effects of subsidies on use by households, by

the poor, and by productive users require further definition. The relative
price, versus availability and reliability in decisions, espcially needs to be explored.
(4) order to Impact analysis. effectively evaluate development is the importance of production

Clearly, the important information needed in the effects changes in of rural standard electrification on of living, output, This information
so that the

economic

employment, and other should be collected

ariables after electrification. for periods spanning several

years

long-term effects of rural electrification can be examined. This is

not
the information currently being gathered in most electrification projects.
Both direct and indirect benefits could be analyzed in this manner, as for
many transportation projects; suoh an
evaluation could be incorporated
systematically into project appraisals. A framework for an evaluation of
this sort of impacts on the poor has been proposed in a report to USAID
(PCI, 1979); a broader approach is needed though to include overall effects
on economic development.
(5) Priorities for electrification. Since more advanced and larger
areas seem to have higher returns backward ones, should

from rural electrification than more

these localities therefore be electrified first,

given the scarcity of investment resources in developing countries? 18

One
of the clearest conclusions that emerges from this analysis is that costs,
groundwater, infrastructure, appropriateness, and the availability of other
inputs vary from place to place, aid that there is a need for more explicit
targeting of suitable areas in rural electrification planning.

18. One Indian study (Sen Gupta, 1977) has ranked talukas
(sub-districts) in one district using an index of groundwater availability,
infrastructure, and backwardness, and advocates priority electrification of
areas with good groundwater resources and adequate infrastructure, but
fairly backward status, in order to take into account both efiiciency and
equity considerations.

68

REFERENCES
BHALLA
1979
Bhalla, Surjit, "Farm Size, Productivity, and Technical
Change in Indian Agriculture," appendix chapter in
R. A. Berry and W. Cline, Agrarian structure and
Productivity in Developing Countries (Johns
Hopkins, Baltimore, 1979).
Bhatia, Ramesh, Energy Alternatives for Irrigation
Pumping: Some Results for Small Farms in
North Bihar (Delhi, institute of Economic
Growth, 1979).
Cecelski, Elizabeth, Juy Dunkerley and William Ramsay,
with an appendix by Emmanuel Mbi, Household
Energy and the Poor in the Third World
(Washington, D.C., Resources for the Future,
1979).
Child, Frank C. and Hiromitsu Kaneda, "Links to the
Green Revolution: A Study of Small-Scale,
Agriculturally-Related Industry in the Pakistan
Punjab," Economic Developmemt and Cultural
Change vol. 23, No. 2 (January 1975) pp. 249 275.
Sambrani, Shreekaut Gunvant M. Desai, V. K. Gupta and P.
M. Shingi, Electrification in Rural Gujarat: Vol.
I, Kodinar Rural Electricity Ccoperative
Ltd; Vol. II Una Scl me; Vol. III Bayad-Modasa
(Ahmedabad, Center for Management in Agriculture,
October 1974).
Developing Alternatives, Inc., An Evaluation of the
Program Performance of the International Pro gram Division of the National lural Electric
Cooperative Association (NRECA), report to U.S.
AID (Washington, D.C., DAI, January 28, 1977).
Davis, J. Michael, John Saunders, Galen C. Moses,
James E. Ross, Rural Electrification, An
Evaluation of Effects on Economic and Social
Changes in Costa Rica and Colombia, report to
U.S. Agency for International Development
(Center for Tropical Agriculture, Center for
Latin American Studies, University of Florida,
Gainesville, Florida, 1973).
Fliegel, Fredrick, Prodipto Roy, Lalit Sen and Joseph
Kivlin, "Agricultural InnovatioLIs in Indian
Villages" in Joseph Kivlin, Frederick Fliegel,
Prodipto Roy and Lalit Sen, eds., Innovation in
Rural India (National Institute of Community
Development, Hyderabad, 1971).

BHATIA
1979

CECELSKI
1979

CHILD
1975

CMA
1974

DAI
1977

DAVIS
1973

FLIEGEL
1971

69

GORDON 1979

Gordon, Lincoln, "Energy Implications of Alternative

Development Patterns" (Washington, D.C.,
Resources for the Future, 1979).
Guyol, N. B., The World Electric Power Industry
(Berkeley, University of California Press, 1969).
Herrin, Alejandro N., "Rural Electrification and
Fertility Change in the Southern Philippines,"
Population and Development Review vol. 5, no. 1
(March 1979), pp. 61-87.
Inter-American Development Bank, Annual Report 1970
(Washington, D.C., IDB, 1978).
McCawley, Peter, "Rural Electrification in Indonesia- is it Time? Bulletin of Indonesian Economic
Studies (1079).
National Council of Applied Economic Research, Cost
Benefit Study of Selected Rural Electrification
Schemes in Madhya Pradesh and Uttar Pradesh
(New Delhi, NCAER, 1977).

GUYOL 1969 HERRIN 1979

IDB 1978 McCAWLEY 1979

NCAER 1977

NCAER 1978

Perspective Plan for Rural Electrification in the Telangana Region of Andhra Pradesh (1975-76 to 1988-89) (New Delhi, NCAER, May 1978).

NEA 1978

National Electrification Administration, Nationwide

Survey on Socio-Economic Impact of Rural Elec trification (Philippines, NEA, June 1978).
Nerfin, Marc, ed., Another Development: Approaches and
Strategies (Uppsala, Dag Hammerskjold Founda tion, 1977).
Moon, Gilbert and National Rural Electric Cooperative
Association (NRECA), Report on Rural Electri fication Costs, Benefits, Usages, Issues and
Developments in Five Countries (Washington,
D. C., NRECA, 1974).
National Rural Electric Cooperative (NRECA), "Social
and Economic Benefits of Rural Electrification
Cooperatives" (Washington, D. C., NRECA, 1978).
Operations Research Group, Consumer, Response to Rural
Electrification (Baroda, ORG, October 1977).
Practical Concepts, Incorporated, Patterns in Electri fication Projects: An Analysis of AID's Automated
Data, IOC No. AID/otr-c-1377 Work Order #20,
report to AID, December 12, 1978.

NERFIN 1977

NRECA 1974

NRECA 1978

ORG 1977 PCI 1978

70

PCI
1979
RAMASWAMY
1978

Practical Concepts Incorporated, Evaluation Planning for

the Aguan Valley Rural Electrification Project-
Honduras (Washington, D. C., PCI, January 1979).
Ramaswamy, N. S., "The Planning, Development, and
Management of Animal Energy Resources in India,"
Occasional Paper No. 10 (Bangalore, Indian
Institute of Management (October 1978).
Ramsay, W. and J. Dunkerley, "Trip Report on India,
January 1-17, 1979," Resources for the Future.
U.S. Dept. of Agriculture, Rural Electrification Admin istration, Rural Lines: The Story of Cooper tive Rural Electrific ation (Washington, D.C.,
GPO, 1972).
Ross, James E., Cooperative Rural Electrification: Case
Studies of Pilot Projects in Latin America (New
York, Praeger, 1972).
Personal communication 1979.
from Auguste Schumacher, June

RAMSAY
1979
REA
1972

ROSS
1972

SCHUMACHER
1979
SELOWSKY
1975

Selowsky, Marcello, Notes on the Appraisal of Rural

Electrification Projects, draft mimeograph
(Washington, D.C., World Bank, 1975).

, Marcello, The Distribution of Public Services

SELOWSKY

1976

by Income Groups: A Case Study of 'olombia. Part

I (Electricity, Water, Sewage), (Draft, Washing ton, D. C., World Bank, August 1976).
Sen Gupta, D. P., Energy Planning for Karnataka State
Phase 1--Towards a More Rational Distribution of
Electrical Energy (Bangalore, Karnataka State
Council for Science and Technology, Indian Insti tute of Science, May 1977).

SEN GUPTA
1977

SEN GUPTA

D. P., Energy Planning for Karnataka State

1979

Phasel--Towards a More Rational Distribution of Electrical Energy (Bangalore, Karnataka State Council for Science and Technology, Indian Institute of Science, May 1977). Sen, Lalit K. and Girish K. Misra, Regional Planning for
Rural Electrification. A Case Study in Surya et
Taluk, Nalgonda District, Andhra Pradesh
(Hyderabad, National Institute of Community
Development, 1974).
Small Industry Extension Training Institute (SIETI),
Impact of Electrification on Rural Industrial

SEN LALIT
1974

SIETI
1976

71

Development: A Study in Kurnool District, Andhra

Pradesh (Yousufguda, Hyderabad, SIETI, 1976).
SIETI
1978
SMITH
1977
Prospects for Modernising Rural Artisan Trades
and Decentralized Small Industries (Yousufguda,
Hyderabad, 50045, SIETI, 1978).
Smith, Douglas V., "Small-Scale Energy Activities in
India and Bangladesh--Trip Reports--March 17-31,
1977 and April 3-14, 1977," Energy Laboratory
Working Paper No. MIT-EL-77-025 WP (Cambridge,
Massachusetts Institute of Technology, 1977).
Squire, Lyn, and Herman G. van der Tak, Economic
Analysis of Projects (Baltimore, Johns Hopkins
University Press for the World Bank, 1975).
Strout, Alan M., "The Future of Nuclear Power in the

Developing Countries," #MIT-EL-77-06 WP

SQUIRE
1975

STROUT

1977

(Cambridge, MIT, 1977).

TENDLER
1978
Tendler, Judith, Rural Infrastructure Projects:
Electrification, report to Studies Division,
Office of Evaluation, Bureau for Program and
Policy Coordination, USAID, October, 1978.
Turvey, Ralph and Dennis Anderson, Electricity
Economics: Essays and Case Studies (Baltimore,
Johns Hopkins University Press for the World
Bank, 1977).
United Nations, Electricity Costs and Tariffs: A
General Study (New York, United Nations, 1972).
U.S. Agency for International Development (USAID),
An Evaluative Study of the Misamis Oriental
Electric Service Cooperative (Manila, USAID,
1976).
Usmani, I. H., "Energy Banks for Small Villages,"
Bulletin of Atomic Scientists vol. 35, no. 6
(June 1979), pp. 40-44.
World Bank, Costs and Benefits of Rural Electrifica tion: A Case Study in El Salvador, P. U. Res.
5 (Washington, D. C., World Bank, 1975).

TURVEY
1977

UNITED NATIONS
1972
USAID
1976

USMANI
1979

WORLD BANK
1975a

WORLD BANK

Rural Electrification:

A World Bank Paper

1975b

WORLD BANK

(Washington, D. C., World Bank, 1975).

,

A Program to Accelerate Petroleum Production

1979

in the Developing Countries (Washington, D. C., World Bank, 1979).

72

RFF DISCUSSION PAPERS

D-I VOTE TRADING: AN ATTEMPT AT CLARIFICATION, by Clifford S. Russell,
December 1976.
WATER POLLUTION DISCHARGES: A COMPARISON OF RECENT NATIONAL ESTIMATES,
by L. P. Gianessi and H. M. Peskin, February 1977.
MANAGEMENT OF ENVIRONMENTAL HEALTH IMPACTS OF DEVELOPMENT PROJECTS, by
Blair T. Bower and Patricia L. Rosenfield, December 1978.
ENVIRONMENTAL MANAGEMENT AS A REGULATORY PROCESS, by A. Myrick Freeman,
III., January 1977.
THE DISTRIBUTIONAL EFFECTS OF THE UNIFORM AIR POLLUTION POLICY IN THE
UNITED STATES, by L. P. Gianessi, H. M. Peskin and E. Wolff, March
1977.
ECONOMIC ENERGY AND ENVIRONMENTAL CONSEOUENCES OF ALTERNATIVE ENERGY
REGIMES: AN APPLICATION OF THE RFF/SEAS MODELING SYSTEM, by R.
Ridker, W. Watson, and A. Shapanka, April 1977.
AN ECONOMETRIC MODEL OF THE PETROLEUM INDUSTRY, by Patricia Rice and V.
Kerry Smith, April 1977.
MODELS OF THE PRODUCTION TECHNOLOGY FOR ELECTRICITY SUPPLY: by Thomas G. Cowing and V. Kerry Smith, April 1977.
A SURVEY,

D-2

D-3

D-4

D-5

D-6

D-7

D-8 D-9

THE CHARACTERISTICS OF EFFLUENT CHARGE SYSTEMS, by Clifford S. Russell,

May 1977.
CONTROL COSTS AND DAMAGES OF ALTERNATIVE NATIONAL POLLUTION CONTROL
POLICIES, by William D. Watson, Jr., May 1977.
MEASURING NATURAL RESOURCE SCARCITY: Smith, May 1977.
THEORY AND PRACTICE, by V. Kerry

D-1O

D-11

D-12

SUMMARY, CONCLUSIONS, AND POLICY IMPLICATIONS OF THE MONTANA COAL

STUDY, by John V. Krutilla and Anthony C. visher with Richard E.
Rice, August 1977.
THE AMES-ROSENBERG HYPOTHESIS AND THE ROLE OF NATURAL RESOURCES IN THE
PRODUCTION TECHNOLOGY, by V. Kerry Smith, August 1977.

D-13

D-14
THE ROLE OF AIR AND WATER RESIDUALS IN STEAM ELECTRIC POWER GENERATION,
by Tran Thl Ngoc Bich and V. Kerry Smith, August 1977.
D-15 THE IMPLICATIONS OF ENVIRONMENTAL REGULATION FOR OPTIMAL MAINTENANCE,
SCRAPPAGE AND INVESTMENT, by Raymond J. KoDp and V. Kerry Smith,
August 1977.

73

D-16

REGULATING ENERGY: INDICATIVE PLANNING OR CREEPING NATIONALIZATION?,

by V. Kerry Smith, September 1977.
RESOURCE AND ENVIRONMENTAL CONSTRAINTS TO GROWTH, by V. Kerry Smith and
John V. Krutilla, November 1977.
COSTS AND BENEFITS OF WATER POLLUTION CONTROL: THE HIGH COST OF
INEFFICIENT POLICY, by William D. Watson, Jr., November 1977.
SOME EXTENSIONS OF A SIMPLE VALUE OF LIFE SAVING MODEL, by A. Myrick
Fraeman, III, October 1977.
FRONTIER PRODUCTION FUNCTION ESTIMATES AND THE TECHNOLOGY OF STEAM
ELECTRIC GENERATING PLANTS: AN ECONOMETRIC ANALYSIS, by Raymond J.
Kopp and V. Kerry Smith, January 1978.
UNCERTAINTY AND ALLOCATION DECISIONS INVOLVING UNIQUE ENVIRONMENTAL
RESOURCES, by V. Kerry Smith, January 1978.
BACKGROUND PAPERS FROM WORKSHOP ON ALTERNATIVES FOR NONINDUSTRIAL
PRIVATE FORESTS, by Marion Clawson, Robert S. Manthy, Philip M.
Raup, and William R. Sizemore, January 1978.
CITIZEN LEGISLATURES: THE BARRIERS TO TURNING GOOD INTENTIONS INTO
GOOD POLICY, by Helen Ingram and Nancy Laney, February 1978.
THE NUCLEAR DEBATE, by Robert C. Mitchell, February 1978.
CONTINUED CARE OF URANIUM MILL SITES: Winston Harrington, January 1978.
SOME ECONOMIC CONSIDERATIONS, by

D-17

D-18 D-19

D-20

D-21

D-22

D-23

D-24 D-25

D-26

ECONOMIC AND ENVIRONMENTAL CONSEQUENCES OF A NUCLEAR POWER PLANT

PHASEOUT, by William D. Watson, Jr., February 1978.
TOWARD A DEFINITION OF THE SPATIAL LIMITS OF TRAVEL COST RECREATIONAL
DEMAND MODELS, by V. Kerry Smith and Raymond Kopp, April 1978.
PRICING OF OUTDOOR RECREATION, by Elizabeth A. Wilman, May 1978.
DISCRIMINATING BETWEEN ALTERNATIVE PROCESS ANALYSIS MODELS FOR
ENVIRONMENTAL QUALITY MANAGEMENT: AN ECONOMETRIC ANALYSIS, by V.
Kerry Smith and William J. Vaughan, May 1978.
THE EFFECTIVENESS OF THE NAVAJO SULFUR CHARGE IN CURBING SO EMISSIONS
AT THE FOUR CORNERS POWER PLANT, by Winston Harrington, Aay 1978.
LONG-RANGE TECHNOLOGICAL FORECASTS FOR USE IN STUDYING THE RESOURCE AND
ENVIRONMENTAL CONSEQUENCES OF U.S. POPULATION AND ECONOMIC GROWTH:
1975-2025, by Adele Shapanka, May 1978.
THE UNITED STATES ENVIRONMENTAL MOVEMENT AND ITS POLITICAL CONTEXT: AN
OVERVIEW, by Robert C. Mitchell and J. Clarence Davies, III, May
1978.

D-27

D-28 D-29

D-30

D-11

D-32

74

D-33

THE COSTS OF FEDERAL WATER POLLUTION CONTROL POLICY AND THEIR

DISTRIBUTION, by L. P. Gianessi and H. M. Peskin, June 1978.
EVALUATING PERCEIVED TECHNICAL INEFFICIENCY WITH STOCHASTIC COST
FRONTIERS: AN APPLICATION OF PSEUDO-DATA, by Raymond J. Kopp, V.
Kerry Smith and William J. Vaughan, May 1978.
!ArIONAL ENVIRONMENTAL LOBBIES AND THE LOGIC OF COLLECTIVE ACTION:
TOWARD A THEORETICAL PARADIGM OF WHY PEOPLE CONTRIBUTE TO THE
PRODUCTION OF COLLECTIVE GOODS, bv Robert C. Mitchell, July 1978.
ENVIRONMENTAL PUBLIC OPINION:
TRENDS AND TRADEOFFS 1969-1978, by
Kathryn Utrup, July 1978.
HEDONIC PRICES, PROPERTY VALUES, AND MEASUJRI)TG ENVIRONMENTAL BENEFITS:
A SURVEY OF THE ISSUES, by A. Myrick Freeman, III, July 1978.
THE REVIVAL OF ENGINEERING APPROACHES TO PRODUCTION ANALYSIS:
ESTIMATION WITH PSEUDO-DATA, by V. Kerry Smith and William J.
Vaughan, July 1978.
ECONOMIC CONSIDERATIONS IN CONTROLLING MERCURY POLLUTION, by William D.
Watson, Jr., July 1978.
HOUSEHOLD CLEANING COSTS AND AIR POLLUTION, by William D. Watson, Jr.
and John Jaksch, August 1978.
THE MEASUREMENT OF TECHNICAL EFFICIENCY INDEXES:
AN APPLICATION TO
STEAM-ELECTRIC GENERATION, by Raymond J. Kopp, September 1978.
MANAGEMENT OF ARID LANDS: AN AGENDA FOR RESEARCH, by Helen Ingram,
Rosemary Nichols, Anne Gault, and Patricia L. Rosenfield, October
1978.
CAPITAL-ENERGY COMPLEMENTARITY: FURTHER EVIDENCE, by Raymond J. Kopp
and V. Kerry Smith, October 1978.
THE COLLECTION OF POLLUTION CONTROL EXPENDITURE DATA, by Henry M.
Peskin, December 1978.
THE PERCEIVED ROLE OF MATERTALS IN NEOCLASSICAL MODELS OF THE
PRODUCTION TECHNOLOGY, by Raymond J. Kopp and V. Kerry Smith,
January 1979.

D-34

D-35

D-36 D-37

D-38

D-39 D-40

D-41

D-42

D-43

D-44

D-45

D-46
THE IMPLICATIONS OF MODEL COMPLEXITY FOR ENVIRONMENTAL MANAGEMENT, by
V. Kerry Smith and William J. Vaughan, February 1979.
D-47 ON THE MEASUREMENT OF PRODUCTIVE EFFICIENCY:
CONCEPTS AND SUGGESTIONS,
by Raymond J. Kopp, March 1979.
APPLICATIONS OF PUBLIC CHOICE THEORY:
AN INTRODUCTION, by Clifford S.
Russell, April 1979.

D-48

75

D-49

PRODUCTIVITY MEASUREMENT AND ENVIRONMENTAL RFfULATION: AN ENGINEERING-ECONOMETRIC ANALYSIS, by Raymond J. Kopp and V. Kerry

Smith, April 1979.

D-50 SINGLE ISSUES: THEIR IMPACT ON POLITICS, by R. Kenneth Godwin and Helen Ingram, May 1979. MULTIPLE USE FORESTY AND THE ECONOMICS OF THE MULTIPROUCT ENTERPRISE, by Michael D. Bowes and John V. Krutilla, May 1979. ANALYSIS OF FUNDAMENTAL POLICY DIRECTIONS: NATIONAL FOREST MANAGEMENT AS AN ILLUSTRATIVE CASE, by John A. Haigh and John V. Krutilla, May

D-51

D-52

1979.
D-53 ENVIRONMENTAL IMPACTS AND ECONOMIC EVALUATION RESEARCH NEEDS FOR COASTAL AND MARINE RESOURCE MANAGEMENT, by Elizabeth A. Wilman and John V. Krutilla, June 1979. THE EMPIRICAL RELEVANCE OF HOTELLING'S MODEL FOR EXHAUSTIBLE NATURAL RESOURCES, by V. Kerry Smith, October 1979. ENDANGERED SPECIES PROTECTION AND WATER RESOURCE DEVELOPMENT, by Winston Harrington, November 1979. SINCE SILENT SPRING: THE INSTITUTIONALIZATION OF COUNTER-EXPERTISE BY THE U.S. ENVIRONMENTAL LAW GROUPS, by Robert C. Mitchell, July 1979. ENERGY, RESIDUALS AND INEFFICIENCY: AN ENGINEERING-ECONOMETRIC ANALYSIS OF ABATEMENT COSTS, by Raymond J. Kopp, August 1979. THE PUBLIC RESPONSE TO THREE MILE ISLAND: A COMPILATION OF PUBLIC OPINION DATA ABOUT NUCLEAR ENERGY, by Robert C. Mitchell, September

D-54

D-55

D-56

D-57

D-58

1979.
D-59 LABOR AND THE ANTI-NUCLEAR MOVEMENT IN THE U.S., Dorothy Nelkin, October 1979. by Rebecca Logan and

D-60

PUBLIC OPINION ABOUT NUCLEAR POWER AND THE ACCIDENT AT THREE MILE ISLAND, by Robert C. Mitchell, August 1979. THE POLLS AND NUCLEAR POWER: A CRITIQUE OF THE POST-THREE MILE ISLAND POLLS, by Robert C. Mitchell, November 1979. MEASURING THE PROSPECTS FOR RESOURCE SUBSTITUTION UNDER INPUT AND TECHNOLOGY AGGREGATIONS, by Raymond J. Kopp, December 1979. HOW "SOFT", "DEEP" OR "LEFT?" PRESENT CONSTITUENCIES IN THE ENVIRONMENTAL MOVEMENT FOR CERTAIN WORLD VIEWS, by Robert C. Mitchell, February 1980. SUBSIDIES FOR DOMESTIC OIL SUBSTITUTES AND TAXES ON OIL IMPORTS: THE TWENTY TO THIRTY DOLLAR MISUNDERSTANDING, by Mark Sharefkin, May

D-61

D-62

D-63

D-64

1q80.

76

D-65

ENVIRONMENTAL POLICY AND CONTROLLED TRADING OF POLLUTION PERMITS, by Clifford S. Russell, July 1980. MODELING NON-NEUTRAL TECHNOLOGICAL CHANGE: AN EXPERIMENTAL ANALYSIS, by Raymond J. Kopp and V. Kerry Smith, September 1980. CENTRAL ARIZONA PROJECT CASE STUDY, by Helen Ingram, William E. Martin, and Nancy K. Laney, September 1980. ESTIMATING THE CHANGING PROBABILITY OF PARTICIPATION IN RECREATIONAL FISHING DUE TO CHANGING WATER QUALITY, by William J. Vaughan and Clifford S. Russell, October 1980. REGULATORY RULEMAKING IN THEORY AND PRACTICE: THE CASE OF EPA'S EFFLUENT GUIDELINES, by Wesley A. Magat, Alan J. Krupnick, and Winston Harrington, October 1980. THE PERFORMANCE OF NEOCLASSIC-ECONOMETRIC MODELS OF NATURAL RESOURCE SUBSTITUTION IN THE PRESENCE OF ENVIRONMENTAL CONSTRAINTS, by Raymond J. Kopp and V. Kerry Smith, October 1980. TWO PAPERS ON NATIONAL ACCOUNTING AND THE ENVIRONMENT, Peskin, October 1980. by Henry M.

D-66

D-67 D-68

D-69

D-70

D-71 D-72

MEASURING THE BENEFITS OF CLEAN AIR, by Allen V. Kneese, March 1981. ENERGY IN DEVELOPING COUNTRIES SERIES

D-73A

INDUSTRIAL ENERGY DEMAND AND CONSERVATION IN DEVELOPING COUNTRIES, by John E. Jankowski, Jr., July 1981. INTER-FUEL SUBSTITUTION IN THE INDIAN ECONOMY, by Ashok V. Desai, July 1981. FACTORS AFFECTING THE COMPOSITION OF ENERGY USE IN DEVELOPING COUNTRIES, by Joy Dunkerley and Gunnar Knapp, with Sandra Glatt, December 1981. INDUSTRIAL ENERGY CONSUMPTION IN A DEVELOPING COUNTRY: THE ECUADORIAN CASE, by Eduardo Moran and Pierre Vernet, March 1982. THE ROLE OF RURAL ELECTRIFICATION IN DEVELOPMENT, by Elizabeth Cecelski with Sandra Glatt, April 1982. ECONOMETRIC MODEL.ING OF PRODUCTION ACTIVITY: THE CASE OF NONFUEL MINERAL DEPI(AND, by Raymond J. Kopp, June 1981. THE DECOMPOSITION OF FRONTIER COST FUNCTION DEVIATIONS INTO MEASURES OF TECHNICAL AND ALLOCATIVE EFFICIENCY, by Raymond J. Kcnp and W. Erwin Diewert, June 1981. ESTIMATING ENVIRONMENTAL COMPLIANCE COSTS FOR INDUSTRY: ENGINEERING AND ECONOMIC APPROACHES, by Raymond J. Kopp and Paul R. Portney, July 1981.

D-73B

D-73C

D-73D

D-73E

D-74

D-75

D-76

77

D-77

VALUING A FISHING DAY, by William J. Vaughan and Clifford S. Russell,

July 1981.
MEASURING AND PREDICTING WATER OUALITY IN RECREATION RELATED TERMS, by
William J. Vaughan, Clifford S. Russell, L. A. Nielsen, and Leonard
P. Gianessi, July 1981.
THE NATIONAL RECREATIONAL FISHING BENEFITS OF WATER POLLUTION CONTROL,
by Clifford S. Russell and William J. Vaughan, July 1981.
THE DISTRIBUTION OF RECREATIONAL BENEFITS FROM IMPROVED WATER QUALITY:
A MICRO SIMULATION, by Winston Harrington, November 1981.
APPLICATIONS OF THE RFF ENVIRONMENTAL DATA INVENTORY, by Leonard P.
Gianessi and Henry M. Peskin, December 1981.
ENERGY AND NATIONAL SECURITY SERIES

D-78

D-79

D-80

D-81

D-82A

SOCIAL COST OF IMPORTED OIL AND U.S. IMPORT POLICY, by Douglas R. Bohi
and W. David Montgomery, December 1981.
TARIFFS AND THE ECONOMIC COSTS OF AN OIL DISRUPTION, by Douglas R. Bohi
and W. David Montgomery, December 1981.
REVIEW AND ANALYSIS OF OIL IMPORT PREMIUM ESTIMATES, by Harry G.
Broadman, December 1981.

D-82B

D-82C

D-82D THE IMPACT OF OIL MARKET DISRUPTIONS ON OTHER FUEL PRICES, by Thomas J.
Lareau, February 1982.

D-83

MATERIALS REQUIR94ENTS AND ECONOMIC GROWTH: A COMPARISON OF

CONSUMPTION PATTERNS IN INDUSTRIALIZED COUNTRIES, by S. Victor
Radcliffe, Leonard L. Fischman, and Radford Schantz, Jr., December
1981.
ISSUES IN URANIUM AVAILABILITY, by John J. Schanz, Jr., Samuel S.
Adams, Richard L. Gordon, and Hans H. Landsberg, January 1982.
RATIONALITY AND IRRATIONALITY IN THE PUBLIC'S PERCEPTION OF NUCLEAR
POWER, by Robert Cameron Mitchell, January, 1982.
ORDINAL AND DUMMY EXPLANATORY VARIABLES: AN ERRORS IN VARIABLES
APPROACH, by Richard T. Carson, Jr., January 1982.
AN ECONOMIST'S REFLECTIONS ON MAN'S RELATION TO NATURE, by John V.
Krutilla, January 1982.
SELECTED ISSUES IN PUBLIC LAND POLICY, by John V. Krutilla, January
1982.
FORMAL VS. DE FACTO SYSTEMS OF MULTIPLE USE PLANNING IN THE BUREAU OF
LAND MANAGEMENT: INTEGRATING COMPREHENSIVE AND FOCUSED APPROACHES,
by Christopher K. Lemqn, January 1982.

D-84

D-85

D-86

D-87 D-88

D-89

78

D-90

A DYNAMIC ANALYSTS OF CROPLAND EROSION CONTROL POLICY, by James S.

Shortle and John A. Miranowski, February 1982.
IMPACT OF EROSION CONTROL POLICIES ON WILDLIFE HABITAT ON PRIVATE LANDS, by John A. Miranowski and Ruth Larson Bender, March 1982. NATURAL GAS DEREGULATION: Russell, April 1q82.
OVERVIEW OF POLICY ISSUES, BY Milton

D-91 D-92